The Israel Tax Authority's new voluntary disclosure procedure will not include an anonymous track as in previous programs, but will include a fast "green" track for reporting cryptocurrency profits of up to hundreds of thousands of shekels, without requiring discussions with an assessment official. This is the procedure that seems to be shaping up from the final discussions for formulating the new voluntary disclosure procedure, publication of which has been delayed for over a year.
"Globes" has also learned that according to the new procedure, specifically intended for cryptocurrency holders who have not reported their profits so far, the discretion of assessment officials to disclose profits from digital assets will be limited to a total of up to NIS 5 million, and any amount above this ceiling will require consultation and approval from the professional department at the Israel Tax Authority.
For other financial assets - savings, income from properties, interest, deposits abroad, and more - the disclosure ceiling in discussions with tax officials will be NIS 10 million. Above that, consultation with the professional department will be required.
NIS 2-3billion in the coffers
The voluntary disclosure procedure allows Israelis who have concealed and unreported assets to report them to the state and pay tax with immunity from criminal proceedings. In May 2024, Israel Tax Authority Director Shay Aharonovich announced that a new voluntary disclosure procedure would be published 'within a few days', which would allow Israelis who have unreported wealth and have not paid tax on it to date, to report their assets and pay tax without fear of prosecution. This is the third such voluntary disclosure procedure that will be published, mainly to allow those who operate in the cryptocurrency market to report their income.
The state collected about NIS 153 million in the procedure that ended in 2019, and over NIS 3.5 billion in the procedure implemented between 2014 and 2016. The state had been expecting to see billions flowing into the state coffers from the disclosure of unreported Israeli capital held worldwide, and according to estimates by the Israel Tax Authority, the new procedure was expected to bring about NIS 2-3 billion into the state coffers, but months passed, and a new procedure was not published.
The main bone of contention that delayed publication of the procedure was the question of whether it would include an anonymous disclosure track, in which citizens could previously keep their identity confidential when submitting the application, and reveal themselves only after it was approved by the Israel Tax Authority.
The "anonymous track" was what led to a significant jump in the number of requests and disclosures in previous voluntary disclosure procedures. Thus, 4,684 of the 7,615 requests filed in the voluntary disclosure procedure ending in 2016 were filed under the anonymous track, and 520 of the 872 requests filed in the procedure ending in 2019.
The latest draft of the procedure is almost identical to previous voluntary disclosure procedures, with the exception of one significant change: the procedure will not have an "anonymous track." After lengthy discussions on the issue, the Israel Tax Authority and Ministry of Justice agreed that this time an anonymous review of the voluntary disclosure would not be possible and the disclosure applicant will be identified from the start.
The Israel Tax Authority initially feared that the absence of an anonymous track would lead to no applicants revealing their hidden wealth due to the fear that if the procedure failed, the state would act against them. However, the Ministry of Justice insisted that after citizens had already been given two opportunities to disclose their wealth in the past, including through an anonymous track, an anonymous track should not be included this time. A Tax Authority source told "Globes,", "There is great sensitivity surrounding the issue of anonymity, which delayed the publication of the new procedure, but now discussions for the final formulation of a voluntary disclosure procedure are in the end stages, and apparently there will be no anonymous track."
Fast track for cryptocurrencies
While the anonymous track has been canceled, a green track will be opened for cryptocurrency investors to report their profits from digital assets up to a certain ceiling. The ceiling amount has not yet been determined, but it will only amount to hundreds of thousands of shekels. This is a fast track that allows the disclosure of financial assets without the need for a hearing with an assessment officer, but only by filing reports.
Previous voluntary disclosure procedures included a "short track" (which later became the "green track"), intended for reporting "small omissions", in which the unreported capital did not exceed NIS 2 million and the taxable income resulting from it did not exceed NIS 500,000. In such a situation, given the relatively low amount, citizens can disclose their income and profits and receive immunity from criminal proceedings in a fast process, with almost automatic approval of the application after filing reports, without needing to negotiate with the Tax Authority.
Published by Globes, Israel business news - en.globes.co.il - on February 17, 2025.
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