Clock ticking on the Tax Authority’s amnesty program

The program gives Israelis the option to voluntarily disclose previously unreported overseas earnings or bank accounts without incurring criminal penalty.

December 15, 2016 21:27
2 minute read.
Man at an ATM in Israel

Man at an ATM in Israel . (photo credit: MARC ISRAEL SELLEM)

The Israel Tax Authority stressed to The Jerusalem Post on Thursday the importance of citizens making use of the authority’s voluntary disclosure program before it expires at the end of December.

The program gives Israelis the option to voluntarily disclose previously unreported overseas earnings or bank accounts without incurring criminal penalty.

“The voluntary disclosure procedure and the amnesty it provides is expected to end at the end of the year. Whoever did not file a disclosure by then, if it is discovered that they evaded tax, can expect a criminal indictment,” Tax Authority spokeswoman Idit Lev told the Post.

According to the Tax Authority, it wishes to motivate taxpayers, including individuals and officers in corporations, which have committed offenses under Israeli tax law – such as failing to disclose a foreign bank account – to amend their tax reports and submit the correct information.

“In order to reach this goal, the authority, in coordination with the state attorney, is willing to forgo taking criminal proceedings against anyone who shall perform a voluntary disclosure according to the conditions of the program,” the Tax Authority stated in 2014, when the program was announced.

A taxpayer may disclose his assets and his unreported income, and only be made to pay the tax derived from it. This is provided that he meets the procedure’s terms, such as a requirement that disclosure was made in good faith, and that there is no ongoing investigation by the authority of the person filing the request.

Those whose unreported wealth does not exceed NIS 2 million and whose taxable income resulting from it does not exceed NIS 500,000 can file an “anonymous disclosure request” and be put on a “fast track” that saves on bureaucracy.

Lev explained that “the anonymous option means that a person can file an initial disclosure request anonymously while disclosing only the sum of unreported assets, earning and accounts. The Tax Authority then notifies that person if he is legally eligible for amnesty and how much tax he owes. At this point an anonymous applicant can chose to reveal his identity, pay the tax and receive amnesty from criminal charges.”

“So far 5,700 disclosures were submitted to the authority, and we uncovered more than NIS 20 billion in undisclosed funds,” Lev told the Post.

Another piece of information that should make tax offenders nervous: the authority’s inspector Shlomi Astrogo confirmed to the business newspaper Globes in June that “the Tax Authority has all the Panama Papers and more,” and is checking Israeli names appearing in them. The Panama Papers are a collection of more than 10 million confidential documents which leaked out of a Panamanian law firm. These include documents from over 200,000 companies and individuals from all over the world, and provide evidence of their allegedly unreported financial activity.

“Anyone not protected by the amnesty program can expect up to seven years in jail for tax evasion, tax fraud, or any other tax related offense. If the authority decides that a specific case can constitute money laundering, then those individuals are looking at a 10-year sentence,” Lev told the Post.

The voluntary disclosure amnesty program was launched in 2014, and following its success, the authority in September 2015 extended it for a year.

“At this point it has not been decided yet whether or not to issue another extension for the program,” Lev said.

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