Voluntary Disclosure Proceeding Print
In recent years, the majority of Western World countries have been investing extensive resources and efforts in seeking out taxpayers with assets and income which have not been reported to the tax authorities and who have not paid taxes on them. The tax authorities have been ramping up efforts to fight unreported capital, including mechanisms for information exchange and data sharing, sometimes eroding the bank confidentiality principle, which until a few years ago was considered by some countries in the world as an untouchable and supreme value. This global trend has not gone unnoticed by the Israel Tax Authority (ITA), and it is presently investing massive efforts to expose unreported Israeli capital, both in Israel and outside Israel, in cooperating with other countries.

In its war on unreported capital, the ITA is allowing taxpayers in Israel who did not report all their income and capital as required to come forward as part of a voluntary disclosure proceeding in order to arrange the tax payment on the civil level, and thereby obtain full criminal amnesty for tax offenses and avoid criminal proceedings.

In September 2014, the ITA published a revised voluntary disclosure procedure in a call to taxpayers to take advantage of the "window of opportunity" granted to them to apply to the ITA for the voluntary tax program. Two temporary one-year provisions were included in this procedure, which are designed to make it easier to apply for voluntary disclosure. The first temporary provision provides an "anonymous track", where an application for voluntary disclosure is initially filed anonymously by a representative, without revealing the taxpayer's particulars, to check the tax liability stemming from the request. Only afterwards are the taxpayer's particulars revealed, subject to settling the tax liability at the civil level. In the second temporary provision which is also for a limited one-year period, the program offers a fast-track option in cases where the unreported capital does not exceed NIS 2,000,000 and the unreported income deriving from it does not exceed NIS 500,000. It is noteworthy that eligibility for the voluntary disclosure program is subject to meeting several conditions, which includes that the disclosure be made honestly and in good faith, without investigating or questioning the applying taxpayer by the ITA.

Due to the complexity of voluntary disclosure proceedings and the sensitive nature of the issues raised, it is recommended to be guided through the process by a professional advisor, and if necessary also an attorney, where the information received in the voluntary disclosure proceedings is privileged.

Our firm has a great deal of experience in conducting voluntary disclosure proceedings involving significant tax amounts, in optimally using the provisions of civil tax legislation on the one hand, with most of the attention placed on arranging the criminal aspects due to coming forward on the other hand. The legal services provided by our firm in the voluntary disclosure field are subject to client-attorney privilege and are absolutely discreet.