On September the 7th, 2014, the Israeli Tax Authorities published a new Temporary Order for Voluntary Disclosure Requests authorized by the new Voluntary Disclosure Procedure (Hereinafter: “Procedure No. 2”). The Temporary Order was published in order to encourage reports of income and assets of which have not been reported to the Israeli Tax Authorities and in order to enable applicants to receive legal immunity from criminal prosecution processes by the Israeli Tax Authorities.
A. ANONYMOUS REQUESTS
- Because of applies to the Tax Authorities and after experience gathered concerning the Temporary Order dated 2011 for the purpose of Voluntary Disclosure for Israelis with income and capital outside of Israel, it was decided to enable applicants to apply for Anonymous Requests in the frame of the above mentioned Temporary Order for an additional trial period of one year from the day of publishing as mentioned above (September 7th, 2015).
- A Voluntary Disclosure Request will be solely filed to the Senior Vice President of the Investigation and Intelligence Department of the Tax Authorities, and it is in his sole authority to approve the request (Hereinafter: the “Certified Authority”).
- The Voluntary Disclosure will be in whole and will include all the relevant information required for the request, including, the relevant taxable years, source of income, specification concerning the omitted amount of income and the estimated tax amount for payment. The request will include all relevant documentation as attachment.
- In addition, together with the Request, Appendix A’, attached to this Temporary Order needs to be signed by the legal representative of the Applicant.
- The Certified Authority will forward the request to the relevant Civil Authority (income tax assessor, local VAT supervisor, real estate taxation principal, customs collector etc.) of which will determine the final amount of tax for payment.
- Within 90 days after submission of the Request by the Civil Authority, the applicant is required to submit Appendix B’, attached to this Temporary Order to the Certified Authority. In this Attachment the Applicant is required to specify his name, in order to continue the examination and further handling of the Request.
- In case the Civil Authority encounters that an additional time period in addition to the 90 day time period mentioned above would be required, he will inform the Applicant by notice in writing with a copy to the Certified Authority and solely in case the additional time period will be limited to 90 days in maximum.
- In case the Anonymous Request can be filed according to the “Short Track”, procedure in accordance with Clause 3 to the Temporary Order, the Certified Authority is allowed to transfer the request according to the conditions of the Short Track procedure.
- In case the name of the Applicant as mentioned above is not reported within the time period as mentioned above, the request will be rejected.
- All the Temporary Orders of the Voluntary Disclosure apply, including the enforced differences, also in case of this anonymous track.
B. LOSS OFFSET
It is hereby clarified that in the frame of this Temporary Order, Losses can only be deducted of which are derived from the Voluntary Disclosure request against profit income or capital gains, according to the matter, of which are reported within the request and solely concerning the tax years (assessment) in the frame of the Voluntary Disclosure request solely. Concerning each particular case, the offset will be according to the Clauses 28, 29 and 92 of the Directive.
Offset of which has not been reported in the frame of the Voluntary Disclosure will not be permitted to deduct in future tax years not in the frame of the request.
In addition it is not permitted to deduct losses of which have been reported in tax reports previously to the authorities in exchange for gains and income as reported in the frame of the Voluntary Disclosure Request.
C. “THE SHORT TRACK” FOR VOLUNTARY DISCLOSURE REQUESTS
In case the total capital for disclosure in the frame of the Voluntary Disclosure Request does not exceed an amount of 2 (two) Million NIS (New Israeli Shekel), and the taxable income derived from this capital does not exceed an amount of 0.5 (an half) Million NIS (New Israeli Shekel) within the assessment period (taxable years), the Voluntary Disclosure Request can be filed according to the Short Track procedure as follows:
a) The Request will be submitted to the Certified Authority, together with the annual tax reports or any additional relevant reports of which have been repaired, according to Appendix C’ attached to this Temporary Order.
b) In case the Certified Authority encounters that the Request stands along with the conditions of the Procedure, the Certified Authority will inform the Applicant that the request is approved, and for final approval subject to the tax payment according to the decision of the Civil Authority. After approval of the request, the Certified Authority will forward the request to the relevant Civil Authority of which will continue the handling of the Request, summarizes it and will issue a voucher for the Applicant stating the amount of tax for payment in frame of the request.
c) In case the Applicant paid the amount of tax in frame of the request within 15 days starting from the day the voucher for payment has been received by the applicant, no criminal prosecution process will be started against the Applicant concerning the information that was reported and the amount of tax that has been paid in the frame of the Request.
d) In case of the “Short Track” Procedure, no Anonymous Requests will be accepted.
e) All the Temporary Orders of the Voluntary Disclosure apply, including the enforced differences, also in case of the Short Track.