Private Clients Tax Voluntary Disclosure in Israel Due to recent developments aiming at tax transparency, private individuals in various countries start to reassess their assets and income situation. This often involves regularizing their current affairs to avoid being pursued by tax authorities. The Israeli Tax Authority (Hereinafter: “ITA”) has launched a Voluntary Disclosure (Hereinafter: “VD”) procedure that may be the tool of choice in such circumstances. Recently the ITA has launched a procedure according to which an individual taxpayer is given the opportunity to disclose any taxable income and/or assets (Hereinafter: “Disclosed Info”) that has not been reported yet for any reason. According to the ITA procedures there are different methods of submitting a VD per the different events and issues that are being disclosed subject to the procedure. It should be noted that VD procedures are time limited and expiry dates are noted herein. ITA has a currently active VD procedure for a limited period of time. The current date of expiry per the VD procedure is December 31, 2016. In addition, the ITA launched an additional procedure according to which a taxpayer may submit an anonymous VD and “shortened course” VD as described below. Voluntary Disclosure in Israel / Tax / November 2014 Generally, the benefit deriving from such a VD is immunity of criminal procedures and charges applicable under tax laws and regulations per the Disclosed Info. Conditions per eligibility A taxpayer must meet the following conditions as determined by the ITA in order to be eligible to submit a voluntary disclosure and enjoy the benefits of such a disclosure: 1. The submitted voluntary disclosure must be complete and must contain all assets deriving tax liability in Israel. 2. The voluntary disclosure must be submitted with good faith. 3. Shall the ITA have any prior information in result of any previous investigation or any other procedure including the taxpayer’s partner (husband/wife) and holding of companies owned/controlled by taxpayer and partner, VD submitted by taxpayer will be rejected. 4. At the time of submitting the voluntary disclosure no investigations have been conducted or are currently being conducted by the Israeli police regarding the taxpayer or his partners businesses. 5. The ITA may reject any VD if the Disclosed Info regarding whether taxpayer and/or life/business partners has been mentioned directly or indirectly within any other procedures and/or by any other state agency, media or court procedures. Notwithstanding Section (3), (4) and (5) above, the ITA may approve a request for VD due to extraordinary circumstances such as critical illness, advanced age etc. Procedure As mentioned above, the VD is procedure effective until Dec 31, 2016. Simultaneously, the ITA published a temporary procedure effective until 7 September 2015, granting the option of submitting an anonymous voluntary disclosure VD and introducing a “shortened course” VD that shall refer to capital not exceeding ILS two million (ILS 2M) and which taxable income derived from such capital does not exceed ILS half a million (ILS 0.5M). All the relevant documentations, including, the names of the applicants, relevant tax years, source of income, details regarding the “omitted” income and the estimate tax liability, and any other information and documentation regarding the Disclosed Info must be submitted along with the relevant official VD forms. Disclosure limitations There is no limitation with respect to the years to be disclosed. It should be noted, that for criminal purposes there is statute of limitations for undisclosed assets/income for a period of 6 or 10 years, depending on the nature of the offense. For civil purposes, the ITA may claim that there is no statute of limitations. Benefits and relief The relief per the voluntary disclosure will be Immunity from criminal procedure solely per the Disclosed Info. The taxpayer will be required to pay the taxes including interest, linkage and civil fines. It should be noted, that in certain events the Tax imposed by ITA subject to the voluntary disclosure procedure must be paid within 15 days, as a condition for receiving the benefits of filing a voluntary disclosure. Cross border advice with utmost discretion KPMG’s network enables us to provide international solutions, calling on our in-house specialists in Israel, with knowledge of the local tax law. We offer our clients the opportunity to have throughout the process a single contact person at KPMG in Switzerland who is familiar with the client’s individual situation and coordinates the process with the utmost discretion. Upon request KPMG’s specialists work in Israel with anonymized data until the voluntary disclosure is actually submitted. Alternatively we can arrange direct contact with our tax specialists in Israel. Contact us Jürg Birri Partner, Head of Legal and Head Regulatory Competence Center Attorney-at-law / Certified tax expert, Zurich T: +41 58 249 35 48 E: [email protected] Assaf Leshem Partner International Tax, Tel-Aviv T: +972 3 684 8049 E: [email protected] Nadine Trachsler Senior Manager Attorney-at-law, Basel T: +41 58 249 71 34 E: [email protected] Arik Eytan Manager International Tax, Tel-Aviv T: +972 3 684 8864 E: [email protected] www.kpmg.ch/voluntary-disclosures The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2014 KPMG Holding AG/SA, a Swiss corporation, is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. Printed in Switzerland. The KPMG name and logo are registered trademarks.
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