Further to our circular of September 6, 2015, we would like to inform you that the Israeli Tax Authority has published the expiration date for the Temporary Voluntary Disclosure Procedure in Israel. The expiration date, which was originally scheduled to be September 7, 2015, has been extended and is now scheduled to be June 30, 2016. As a result of this extension, taxpayers can still submit applications for a voluntary disclosure procedure under the anonymous route, as well as the shortened route, as specified below.

In addition, it has been decided by the tax authorities that the voluntary disclosure procedure will also apply to taxpayers who have declared insignificant amounts of income. The formal voluntary disclosure procedure determined that an application which resulted in an insignificant amount of taxes is not qualified for the procedure. In practice, the tax authorities have not processed applications with an amount of taxes that was lower than NIS 50,000. Such applications were rejected by the Israeli Tax Authority and the taxpayers did not receive immunity from criminal proceedings. 

According to the new decision, any taxpayer whose application was rejected due to a low tax amount can now submit a new application to the Israeli Tax Authority and request immunity from criminal proceedings. 

Further to this decision, the tax authorities have indicated that many more applications for the voluntary disclosure procedure have been submitted and the total number of applications which were submitted until now, is approximately 3,800 applications. 

As a reminder –

As we informed you in our previous circulars, on September 7, 2014, the Israeli Tax Authority published a Temporary Voluntary Disclosure Procedure. This procedure has had a significant success and until today, approximately 3,800 applications for Voluntary Disclosure have been submitted. In summary, the Temporary Procedure enables taxpayers to apply for a voluntary disclosure procedure in two main ways which made the application more favorable to the taxpayer:

  • The Anonymous Route. This route enables the submission of anonymous applications, without disclosing the details of the taxpayer to the tax authorities. After the conclusion of the negotiations regarding the tax liability, the name and details of the taxpayer are provided to the tax authorities.
  •  The Shortened Route. In cases where the capital included in the voluntary disclosure application does not exceed the sum of NIS 2,000,000 and the taxable income derives from such capital does not exceed NIS 500,000 in the relevant tax years, the voluntary disclosure application can be submitted by way of a shortened route. This route enables a submission of amended tax returns for the relevant years.