The Israeli tax office has confirmed that trading in bitcoin is subject to 17% VAT.
The announcement confirms that virtual currencies, such as bitcoin, are to be regarded as tradable assets and therefore subject to direct (income tax and capital gains tax) and indirect taxes (VAT or GST) on transactions. This compares to the EU, and many Asian countries, which view it as a virtual or private currency. This would qualify transactions as VAT exempt.
The only other major economies to still levy VAT or other indirect taxes on bitcoin trades are Australia and Japan. It is anticipated that the latter will reverse its position shortly.
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