Renewed Israeli Voluntary Disclosure Program

September 7, 2014

As part of the increasing efforts of the Israeli Tax Authorities (“ITA”) to detect tax evaders and to expose unreported worldwide income of Israeli tax residents, the ITA has published today a New Voluntary Disclosure Program which will replace the current program.

The objective of this new program is to encourage non compliant tax payers to come forward, disclosure their unreported income and pay taxes, thus avoiding criminal prosecution.

According to the new program, the taxpayer can disclose the unreported income, and pay the taxes due, in the event that all conditions of the program are met, which includes a voluntary disclosure made out of good faith effort and disclosure before the ITA has started conducting an investigation or questioning the tax issues of the applicant.

Taxpayers who are accepted into the program will still have to pay all taxes due but in return the ITA, with the approval of the Criminal State Attorney, will not recommend criminal prosecution against these taxpayers. Therefore the ITA is highly recommending to utilize this “window of opportunity” to come forward before an investigation is initiated against taxpayers.

In addition, and as part of the new program there are two temporary provisions which have been added for the limited period of one year only in order to lighten the procedure of the voluntary disclosure:

1.  An Anonymous Track- this track enables the taxpayer to come forward anonymously in order to check out the tax liability and upon which the taxpayer has a limited time frame to expose his name and his full details in order to participate in the program.
2.  A Fast Track-when the total unreported capital included in the voluntary request does not exceed NIS 2,000,000 and the unreported income derived from it does not exceed NIS 500,000, the taxpayer can submit his request using this “Fast Track” together with his amended returns. If the request is approved, the taxpayer will receive a payment voucher. Once this voucher is fully paid by the time limit indicated on it, the taxpayer will receive notification stating that no criminal investigation will be opened regarding the information he had disclosed.