In an effort to increase the number of applicants wishing to disclose their unreported assets, it has been decided by the Israeli tax authority to provide a temporary order which will be added to the original voluntary disclosure procedure (VDP) commenced in 2005.
The temporary order includes the ability to approach the authority anonymously.
- Approaching anonymously – The applicant will approach the ITA with all the relevant information for the tax years i.e. source of funds, source of capital, detailing the amount of income which was neglected and the tax assessment to be paid.
Once it has been approached and reviewed by the ITA the application will be forwarded to the relevant civil tax officer (as opposed to the VP of interrogations & intelligence officer which reviews the application beforehand) in order to determine the tax rate.
The applicant has 90 days from the moment the application was received by the civil tax officer to provide all other details which will include the applicant’s name.
Should the applicant fail to provide his name according to the abovementioned period, the application shall be denied.
- Short procedure (“Green Lane”) – Applicants which their total capital included in the application does not exceed 2M NIS, and that their taxable income does not exceed ½ M NIS (during the relevant tax years), are able to apply using the short procedure:
- The application shall be submitted to the ITA alongside the yearly tax reports or any other relevant documents after those have been amended accordingly.
- Should the ITA decide that the application is eligible to the VDP, it will transfer the application to the civil officer to determine the tax rate.
- Should the applicant pay the tax rate demanded by the ITA within 15 days of the notice, no criminal procedures shall commence.
- Anonymous applications are not possible using this procedure.
3. loses deduction – Applicants choosing to disclose their assets via the temporary order shall have the opportunity to offset their losses with their income or capital gains (only for the years that the VDP applies to).