More arrests of Israeli tax dodgers expected soon

Moshe Asher
Moshe Asher

Tax Authority chief Moshe Asher: Banking secrecy is over.

Another wave of arrests of Israelis with unreported overseas bank accounts and money is expected. In the coming day, Israelis who have not filled out forms sent to them by the Israel Tax Authority for declaring their assets will be summoned for investigation, according to Tax Authority head Moshe Asher, who spoke yesterday at a conference of the Israeli branch of the Society of Trust and Estate Practitioners (STEP).

In recent months, the Tax Authority has been conducting a large and complex investigation into unreported accounts held by Israelis in foreign banks, as part of its campaign against an estimated NIS 50 billion in concealed illegal capital owned by Israelis around the world. This involves bank accounts kept by Israelis, mostly in Swiss banks, amounting to hundreds of millions of euros. Asher said, "Israel has a problem with illegal capital, and we're now meeting the forecasts, and surpassing them." He added that as a result of the war on illegal capital being conducted by the Tax Authority, income tax revenue since the beginning of the year was NIS 3.5 billion higher than the forecasts.

Asher stressed that in the new emerging situation, tax evaders had nowhere to hide. The Tax Authority last year obtained lists of accounts of Israeli clients of Swiss bank UBS suspected of failing to report their assets held at the bank, and the Tax Authority has already begun investigating them. Asher recently revealed that the Tax Authority had obtained another list of Israelis with accounts at another Swiss bank, and was taking action to detect the tax evaders on the list. Asher yesterday revealed that there were still other lists in the pipeline. "Switzerland was once the world's safe deposit box, from which no information could be extracted. They have been forthcoming recently, even if in contravention of Swiss law," Asher remarked. "As is known, there is one bank from which we have already gotten information (HBC, E.L-W.), and there are another one or two Swiss banks in the pipeline whose data we'll publish soon. Inroads have been made in Swiss banking confidentiality - it's like any other country now, subject to conventions and obligated to provide information. Secrecy is over - the world has much become more transparent and much smaller. The world is surrounded by glass today, and the tax authorities can see all the figures. This is the time to come and make an arrangement for unreported capital, because the tax authorities will find it."

Asher continued, "In the next few days, we'll also see people who didn't fill out the form sent to them summoned for investigation" (over the past year, the Tax Authority sent out over 100,000 declaration forms requiring the taxpayers who receive them to immediately report their income and wealth in Israel and overseas, E.L-W.)

Dealing with taxation policy

Later in his remarks, Asher set forth the Tax Authority's plans and continued deployment for taxation in a global and transparent world, while making clear that the channels for transferring information from other countries to Israel and vice-versa would be expanded. He said that the Tax Authority's most important goal was to enhance its databases and cross check information using the most advanced methods in order to identify tax evaders and curb black capital. "In recent years, we have seen movement on exposing the capital of Israelis residing overseas. The Tax Authority's chief focus right now is an emphasis on legislative amendments and dealing with taxation policy," Asher declared. "A new government was formed only recently, and is already drafting the Economic Arrangements Bill, in which we'll propose several amendments. We'll expand the information sources and improve them, with an emphasis on overseas databases. We're making efforts to get to overseas accounts, and are promoting legislation that will allow a more effective exchange of information. In addition, we're investing a lot in developing a system that will enable us to cross-reference data and conduct a more accurate audit."

Increased cooperation with the US

Asher also commented on the agreement reached by the Ministry of Finance with the US Department of the Treasury for implementation of the US Foreign Account Tax Compliance Act (FATCA) for improving global tax enforcement. Under the agreement, signed a year ago, the Israel Tax Authority will report the accounts of US citizens in Israel to the US Internal Revenue Service (IRS). The agreement institutionalizes the transfer of information to the US tax authorities through the Israel Tax Authority, which will obtain the information from financial entities in Israel. It was also agreed that the IRS may report on income in accounts of Israelis in the US. Asher made it clear that obtaining information about Israelis with overseas accounts was closer than ever.

"The US sent a delegation here, which examined our systems and information security, and was very impressed. We'll soon be able to get information about Israelis with overseas accounts. In addition, the OECD has copied the US by setting a standard called CRS, to which Israel is also committed. These standards are very similar to FATCA, and we'll join them by 2018."

Success in voluntary disclosure

Asher also spoke about the voluntary disclosure procedure, which is due to expire in September, although its extension is already being discussed. In this procedure, taxpayers report previously unreported assets to the Tax Authority with no criminal proceedings. "2,100 citizens have already submitted a request for voluntary disclosure, and the rate is increasing daily," he said, adding, "There are more than a few requests to extend the period of the temporary order."

Published by Globes [online], Israel business news - - on June 24, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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