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INTERNATIONAL - ISRAEL: Tax authority launches new voluntary disclosure programme

Israeli Tax Authority Publishes New Voluntary Disclosure Program

The Israeli tax Authority (ITA) published on December 12, a new Temporary Direction for Voluntary Disclosure Procedure (the "New VDP").

The New VDP is in force from the date of its publication until December 31, 2019, except for the anonymous track which will be valid only until December 31, 2018.

The New VDP will probably provide the last official chance to settle the reporting and taxation duties in connection to undeclared assets before the ITA will start implementing de facto the various exchange of information facilities. 

Following are main features of the New VDP:

1.  A person may apply for a voluntary disclosure only once.

2.  Information included in the application The submitted application must include certain information, including, the amount of  non-declared income, the amount of non-declared capital, and estimated tax due. The application must confirm that the source of the assets are not from illegal activity.

3.  Anonymity Every application can be submitted anonymously An anonymous application will be reviewed and a draft agreement will be concluded  within 180 days. This period may be prolonged, if needed, for an additional 90 days. Upon conclusion of the agreement, the name of the applicant must be disclosed. If  the name is not disclosed, the application will be rejected and all details and  information submitted could be used as evidence in any civil or criminal procedure.

4.  "Green VDP" Applications where the total amount of undeclared assets is below ILS 2,000,000 and  the taxable income is below ILS 500,000 may enjoy a faster and more efficient procedure. The application for a Green VDP must include the applicant's identity and amended tax  return for all relevant tax years. If the application is accepted and confirmed, the ITA will issue an invoice, and if the  invoice is paid within 15 days since its issuance, no criminal procedure will be initiated.

5. Offsetting losses Under the new VDP, it will be possible to offset losses created in connection with the  assets referred to in the application, provided that the losses were not declared in  previous tax returns submitted by the applicant. The possibility to offset losses is limited to the period referred to in the application.