Tax Authority pursues Israelis holding foreign bank accounts

Eran Yaacov  credit: Eyal Izhar
Eran Yaacov credit: Eyal Izhar

Israel Tax Authority director Eran Yaacov: We're receiving a great amount of information and sending hundreds of letters requiring returns.

The Israel Tax Authority is sending letters today to hundreds of Israelis with bank accounts overseas, Tax Authority director Eran Yaacov revealed yesterday at the opening panel of the annual conference of the Institute of Tax Consultants in Israel. "There are very many results from the information that reaches the Tax Authority from exchanges of information under the FATCA and CRS agreements. Very many results. You’ll see some of the results on Monday or Tuesday. On Monday, we’ll send hundreds of letters to people who have accounts overseas," Yaacov said yesterday.

"There are 88 countries that send us data by September each year, and it often happens that countries report even before that, so hundreds of letters will go out this week to those from whom we will actively request reports. We’ll open files on them," Yaacov added.

Israel is a signatory to more than 50 treaties for preventing double taxation, under which some of the countries concerned undertook to transfer information about income and cash of Israelis within their borders. In addition, the Tax Authority receives detailed information under the US FATCA (Foreign Account Tax Compliance Act), whereby it sends information to its US counterpart, the Internal Revenue Service, on financial assets of Israeli citizens with US ties, and in exchange receives information about Israelis with accounts in the US. Similarly, under CRS (Common Reporting Standard) agreements, there is automatic exchange of information on financial accounts of foreign residents in Europe and elsewhere.

The information received has revealed hundreds of overseas bank accounts held by Israelis with balances of tens of millions of shekels not reported to the authorities in Israel. Some of the files are being transferred for investigation and criminal proceedings. In other cases, files are marked for monitoring and those concerned are requested to report. "We receive a great deal of information," Yaacov said. "Some goes immediately for investigation, such as where there are large unreported amounts; some goes for tax assessments; and some expands the reporting base. We work according to a set of priorities. This week, we will contact hundreds of people to whom we’ll say that we’ve opened a file on them, which means that they have to file a return. If anyone doesn’t file a return, there are sanctions. What has to happen is that a return is filed immediately. I suggest from this platform first of all to hurry to file the returns, and to do so as soon as possible."

Later, Yaacov commented on the problem raised by the president of the Institute of Tax Consultants in Israel, Yaron Gindi, that profits on transactions in cryptocurrencies cannot be deposited in the Israeli banking system, because the banks refuse to receive the money, including money intended for paying tax on such profits.

"Unfortunately, in dealing with risk factors to do with money laundering, the banks mainly exclude risk rather than manage risk, and this requires a rethink. The reality today is that, not just in relation to cryptocurrencies, opening a bank account here is much harder than opening a foreign bank account. The difficulty is real. It’s also quite difficult for investors to transfer money to Israel, whether its investment money or tax payments."

Yaacov said that a solution would be announced within the next few days. "Since we have to deal with legal rulings to do with cryptocurrencies, I hope that in the near future the Attorney General will make a decision on the matter, and I very much hope that the decision will be one that will enable us to have a process that is easy, with simple checks, for transferring the money, certainly when it comes to money for tax payments, and to pay it into bank accounts or to the public purse. I think that in the end, when that doesn’t happen, the State of Israel loses out twice over. I believe that within the next few days, really very soon, there will be a solution. It’s not a perfect solution, but it will deal with the problem at least to some extent, and make it easier for the banks to transfer money."

Published by Globes, Israel business news - - on October 31, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Eran Yaacov  credit: Eyal Izhar
Eran Yaacov credit: Eyal Izhar
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