The Israel Tax Authority announced recently that the temporary Voluntary Disclosure Program will remain in effect until June 30, 2016. Israelis with undeclared capital and income may apply to the Israel Tax Authority under the Voluntary Disclosure Program, in order to avoid criminal proceedings.
The original expiration date was scheduled to be September 7, 2015, but has been extended to be June 30, 2016. As a result, Israelis can still submit applications under the anonymous route, as well as the shortened route, as detailed in the Voluntary Disclosure Program.
The Program Achievement
In 2015, it is expected that more than 4000 applications will be submitted to the Israel Tax Authority under the Voluntary Disclosure Program, most of them anonymously. The anonymous route under the Voluntary Disclosure Program enables the submission of anonymous applications, without disclosing the details of the applicant to the Israel Tax Authority. After the conclusion of the discussions regarding the tax liability, the name and details of the applicant is provided to the Israel Tax Authority. The Voluntary Disclosure Program is expected to raise an aggregate capital of NIS 12 billion.
The Israel Tax Authority decided to extend the Voluntary Disclosure Program deadline due to the great success of the program so far and an approval to the Israel Tax Authority by the Attorney General.
The extended Voluntary Disclosure Program has abolished the requirement for applicants to pay not an insignificant amount of income. The previous rule under the Voluntary Disclosure Program determined that an application which resulted in an insignificant amount of taxes is not qualified for the program. In fact, under the previous Voluntary Disclosure procedure the Israel Tax Authority did not processed applications with an amount of tax payment that was lower than NIS 50,000. Such submissions were rejected by the Israeli Tax Authority and the applicants did not receive immunity from criminal prosecution.
The Israel Tax Authority proclaimed in the extended notice that Voluntary Disclosure Program applicants will now be allowed to resubmit their requests that were previously rejected on this reason and request immunity from criminal examination.
The extended Voluntary Disclosure Program does not provide answers to all the relevant issues, such as the imposition of penalties. It is also important to mention that the procedures under the Voluntary Disclosure Program may be long and complex, particularly in cases of undeclared income earned outside of Israel and which was deposited in foreign banks.
Dr. Avi Nov Law Offices, Israeli & international tax law
* This article is intended for informative purposes only and is in no way to be construed as tax advice or a legal opinion