One of the most appealing purposes of voluntary disclosure procedures in Israel is the criminal immunity it provides.
These procedures ensure that taxpayers’ applications will be handled civilly, effectively avoiding the prospect of criminal sanctions. This procedure has proven to be effective over time.
Despite Israel Tax Authority’s claim to provide protection from criminal prosecution, some taxpayers were skeptical of the tax authorities sincerity. It is critical to emphasize that the assurance of criminal immunity is kept via voluntary disclosure procedure as long as taxpayers act in good faith and are not under investigation.
It’s worth mentioning that settling tax issues required not only because of risk of criminal and civil exposures. If you plan to transfer money from a foreign bank account to an Israeli account, for example, Bank will usually demand approval that all necessary taxes have been paid. In addition, The Common Reporting Standard (CRS) regulation strengthens this further by information exchange between Israeli banks and foreign tax authorites.
The Tax Authority detained an Israeli resident in July 2023 for failing to report income of about €20 million from share transactions. It is suggested to consider starting a voluntary disclosure process as soon as possible to reduce criminal and civil risks.
Despite the fact that the voluntary disclosure procedure has not been formal updated since 2019, taxpayers can still settle their liabilities with the Tax Authority. The potential of criminal consequences is greatly reduced once a settlement or appropriate tax report is submitted. In view of the economic consequences of the coronavirus epidemic, the Ministry of Finance is considering adjustments to voluntary disclosure procidure, which will be more stringent.
An settlement, even before the updated voluntary disclosure will apply, is especially suitable for those who have unreported income from rental properties, international bank accounts, or other sources of income, in order to reduce both criminal dangers and financial responsibilities. Our firm specializes in making tax planning, negotiation with Israel tax authority and reaching optimal tax solutions for our clients.
Contact Us if you have any questions about the matter.
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