Tel Aviv diamond dealer Hanan Itzhakov was arrested yesterday on suspicion of tax evasion in the affair of HSBC Switzerland bank accounts that were not reported to the Israel Tax Authority. Some of the bank accounts discovered by the Tax Authority were under his sole ownership, while others were jointly owned with his children and wife. The accounts contained a total of NIS 16 million. Itzhakov was the fifth Israeli arrested on the list of account holders in the Swiss bank.
The investigation began following information obtained by the Tax Authority's international taxation unit. In the framework of this information sharing, the Tax Authority was given a list of Israelis holding accounts in Swiss bank HSBC, including personal particulars, account printouts, and other details. Shortly after the list was exposed, the first wave of arrests in the affair took place, in which four diamond dealing brothers were arrested on suspicion of holding tens of millions of shekels in these bank accounts.
An investigative tax assessor's request for the conditional release of Itzhakov states that Itzhakov was interrogated yesterday in the Tax Authority offices, and admitted the existence of the HSBC accounts. He also told his interrogators that the amounts in his account had reached a peak of $6 million (over NIS 20 million). He added that he had not reported the account and the profits accumulated in it because he had not been aware that he was obligated to do so. Itzhakov is suspected of omitting foreign accounts from his financial reports, which therefore did not include the financing income from these accounts.
Itzhakov's wife and two of his children were also questioned yesterday, and evidence was taken from the accountant representing him with the tax authorities. Tax Authority investigators previously raided Itzhakov's home and searched his office and the homes of two of his children. Material was seized from him and his accountant during these searches.
Tel Aviv Magistrates Court Judge Shlomit Ben Yitzhak granted the investigative unit's request for the release of Itzhakov under restrictive conditions, including NIS 300,000 bail from the suspect, a guarantee for the same amount from a third party, a NIS 50,000 cash deposit, a stay of exit from Israel order, and others.
Lists of thousands of Israelis
In August 2016, the Tax Authority announced that six months after the existence of a list of HSBC customer had been published, it had obtained a list of over 8,000 Israelis with accounts at this bank. Less than a month after obtaining the list, the first arrest of tax evasion suspects took place: four veteran diamond dealing brothers from Ramat Hasharon and Tel Aviv were arrested on suspicion of omitting their foreign accounts at the Swiss bank from their capital declarations and not including the financing income from these accounts in their financial reports. The four brothers - Hanan, Gad, Yoram, and Michel Menachemov held NIS 100 million in the Swiss bank without reporting the money to the tax authorities in Israel. The suspects denied the suspicions attributed to them and were released under restrictive conditions, including personal bail and depositing their passports.
The list of Israelis with HSBC accounts comes on top of other lists of Israelis with overseas accounts obtained by the Tax Authority in recent years. The best known of these is a list of customers at UBS Switzerland; its exposure led to the interrogation of dozens of customers who did not report their accounts, and the first indictments in the affair were recently filed. The Tax Authority also pursued various avenues following the publication of the Panama Papers, and now possesses comprehensive information about Israelis who have registered companies in Panama and other tax shelter countries. Under the law, an Israeli citizen is entitled to have an overseas bank account, but he must report it and the income produced from it (interest, dividends, capital gains, etc.) to the Tax Authority.
The lists obtained by the Tax Authority include a broad range of documents indicating the bank's policy with its customers. In the first stage, expected to continue for a few months, the Tax Authority will check and sort the material, and compare it with the reports by those Israelis to the tax authorities. The process of sorting the documents will show which customers included reporting of their accounts in their regular dealings with the Tax Authority, and which of them reported the account's existence in the framework of the voluntary disclosure policy provided by the Tax Authority, in which unreported assets can be declared without risking criminal proceedings.
Published by Globes [online], Israel business news - www.globes-online.com - on November 9, 2016
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