New Voluntary Disclosure Procedure by the Israeli Tax Authority
On September 7, 2014 in continuance to the Israeli Government’s policy to fight “black” money and to increase the collection of taxes in Israel, the Israeli Tax Authority published a New Voluntary Disclosure Procedure that allows a taxpayer to report his/her non-reported income to the tax authority with the possibility to be exempt from criminal proceedings for not reporting.
The New Voluntary Disclosure Procedure came into force on the day of publication and will be in effect until December 31, 2016.
With the New Voluntary Disclosure Procedure the Tax Authority published Temporary Rules, a special temporary order, which will be in effect for a period of one year until September 6, 2015.
The Temporary Rules are setting forth two new optional routes:
- Anonymous Procedure
- Special route for small accounts
- Anonymous application
The Temporary Rules allow taxpayers to submit an application for Voluntary Disclosure on an anonymous basis.
According to this procedure the taxpayer submits his/her application without indicating his/her name to the Israeli Tax Authority’s criminal department. The application should include all information relevant to the disclosure, including information showing to which fiscal year the disclosure is related, the origin of the capital, the origin of the income, details as to the amount of income and a calculation of the tax to be paid. With the application the taxpayer submits all relevant documents and statements to support the information specified in his/her application.
Within 90 days the relevant local tax office will inspect and agree on the final tax liability. After this period with a possible extension of another 90 days the taxpayer is required to provide his/her personal details including his/her name to the Israeli Tax Authority for the purpose of completion of the voluntary disclosure. The taxpayer will reveal his identity only if the final terms are acceptable to him. If the taxpayer does not disclose his/her personal details the application for the voluntary disclosure will be dismissed.