On November 15th, 2011, the Israeli Tax Authority (“ITA”) published a circular concerning a temporary favorable procedure of voluntary disclosure, with regard to undeclared assets and earnings from outside of Israel. The procedure was set for a limited period of time commencing November 15th, 2011 until June 30th, 2012.
This procedure-circular constitutes a breakthrough and a window of opportunities in relation to the tax liability arrangements for Israeli residents, and in particular those who own bank accounts abroad.
The procedure sets a number of conditions to those eligible to enter within its gates; however, it seems the procedure does not fit all Israeli residents who would consider applying to the ITA.
The short period of time that was set, requires the taxpayers to take immediate action to obtain and gather the information, so that they may submit the applications (a full and detailed application according to the procedure) to a committee of 4 members, deputy director generals of the ITA and activate the temporary provision thereof. The application will result in a process examining the origin and the taxation in Israel of the disclosed funds, as well as the taxation in Israel of the yields resulting from those funds over the years. According to the Israeli tax laws, interests & dividends are taxable as from January 2003, while capital gains are taxable even prior to 2003.
An extended Tax Alert on the subject will be issued within a short time.
