NFT Creators Allegedly Embezzled Taxes After Cuan Of IDR 31.8 Billion From Digital Art Sales

JAKARTA - The Israeli Tax Authority is investigating two NFT creators suspected of tax evasion. Avraham Cohen from Jerusalem and Antony Polak from Har Adar allegedly did not report income of around 8 million new Israeli Shekels (NIS) or equivalent to Rp31.8 billion from the sale of 3D scan-based NFT Western Walls, according to The Jerusalem Post.

The two suspects sold their NFTs through the holrocknft.com website. According to the investigation, the two suspects have sold 1,700 works since 2021 and earned 620 Ethereum as payments, which is equivalent to around NIS 8 million at the time of the transaction. However, the two suspects did not report this income as a business income.

The two suspects were released on strict terms, including handing over their digital wallet where Ethereum was stored. According to The Jerusalem Post, the investigation is still ongoing, and the suspect is awaiting further legal proceedings.

In Israel, the capital profit is taxed at 25 percent. However, if it is considered a business fee, the tax rate can reach 53 percent. When cryptocurrencies are converted to traditional currencies, the difference between the amount paid and purchased is used for tax purposes.

This is not the first time an NFT creator has been investigated for tax evasion in Israel. Ben Benhorin, a graphic designer from Tel Aviv who created and sold NFT art on the international platform Opensea under the WUWA brand, was recently arrested for not reporting his revenue of about NIS 3 million from his work sales.

According to a Cryptoslate report, the suspect also did not report the conversion of 30 Ethereum-type cryptocurrencies he received as payments. During the investigation, it was found that the suspect did not report earnings from sales on the platform in his annual report to tax authorities in 2021.

The suspect allegedly converted part of the cryptocurrency he received from selling NFT into another currency using the Uniswap decentralized crypto exchange platform (DEX), which he did not report to the tax authorities. The measure is considered a taxed sale.

According to reports, Israel has begun to step up its efforts to regulate and oversee crypto markets and NFTs in recent years. This includes new regulations requiring crypto exchanges and crypto wallet service providers to be registered with Israeli financial authorities and comply with anti-money laundering requirements.