Israel Resurrects Voluntary Disclosure for Unreported Income – What You Need to Know
In the new year, Israel’s governmental authorities will be implementing automatic trades of tax information with other countries, known as the Common Reporting Standard (CRS). In anticipation, the Israeli Tax Authority is offering taxpayers the opportunity to voluntarily disclose previously unreported assets and income. In exchange for volunteering this information and paying the proper owed taxes on the income, people will be able to avoid prosecution for tax evasion. The disclosure facility is available until the end of 2019.
The Israeli government successfully recovered NIS 3 billion in unpaid tax revenue during the last period for voluntary disclosure, which ran from September 2014 to December 2016.
Immunity from prosecution requires several elements. These include that the taxpayer must not already have an investigation pending for non-reported income or assets, the disclosure must be full, thorough and made in good faith, the taxpayer must cooperate fully with authorities, and the missing taxes must be paid in a timely fashion once the amount has been agreed with the relevant body.
As in the previous voluntary disclosure period, there will be several options. The first track, in which taxpayers may file this disclosure anonymously, will end on December 31, 2018. Once the file is cleared by a local tax assessor, who will determine the tax rates, interest, and fines owed, the applicant’s identity is attached to the file. If the taxes due are paid, no criminal charges can be brought, provided that the other conditions mentioned above are met.
An abbreviated track is available for taxpayers who have NIS 2 million or less in capital to report, and the taxable income is less than NIS 500,000. Applicants to this track may not be anonymous, but the assessor on the case will not investigate the amount due and simply issue a directive to pay what is owed.
The exact procedures for filing the proper paperwork are expected to be forthcoming in the near future. You can expect to need to detail accounts, amounts, and dates for missing tax years, as well as provide supporting documentation. You can find initial information and instructions from the Israel Tax Authority here.
If you have questions about your assets, income, reporting, or requirements – or what to do next – contact us today!