We write to update you about the issuance of a "temporary directive" by the Israeli Tax Authority - the "Exporter Affidavit" form, which will take effect from September 1, 2016 ("the Directive"). It will serve as an additional requirement for exporters to complete, as part of the Israel Government's enforcement of the Defense Export Control Law, 2007 and other relevant orders related to the export of defence and dual use goods (together, "the Relevant Legislation").

Specifically, in order to ensure that goods to be exported meet the provisions of the Relevant Legislation, the exporter will be required to prepare an exporter affidavit (including information about the destination and content of the goods), and submit it to a customs agent, together with the export invoice and other export documents.

The Directive applies to all exporters and all exported products, but it imposes stricter requirements and levels of supervision on exporters who are registered as "defence exporters" with the Ministry of Defence's Defence Export Control Agency ("DECA") - (the "Defence Exporters") than any exporters which are not Defence Exporters.

Specifically, all Defence Exporters are required to submit an exporter affidavit for each shipment and delivery, even if the delivery does not include any controlled goods (defence or dual use). Comparatively, exporters which are not Defence Exporters are required to fill such affidavit only when exporting controlled goods (either goods under the supervision of DECA or the Ministry of Economy which supervises civilian dual-use goods exports ("MOE")). In regards to exports of any other non-controlled products, such exporters which are not Defence Exporters will only be required to complete and submit an annual affidavit (rather than each time it wishes to export).

Additionally, according to a clarification letter that was released in limited circulation, slightly updating the explicit wording of the Directive, the exportation of regulated products via a courier service (e.g. UPS, Fedex and DHL) is permitted, provided that the courier service companies do not use their designated system that transmits exports data to customs, but rather uses the standard export system, which also services international forwarding services companies.

With the new Directive's entry into force, exporters will be given an adjustment period untilDecember 31, 2016. During that time, exporters and/or customs agents acting on their behalf shall receive alerts on discovered failures without any punitive measures being taken for any regulatory fouls. As of January 1, 2017, failure to submit the affidavits, in accordance with the Directive, shall be deemed a violation of the Relevant Regulations and will lead to administrative sanctions and possibly criminal action against violators.

We will be happy to provide guidance to companies, which are both Defence and non-Defence Exports, in order to familiarize and comply with the relevant requirements of the new Directive.

To read the Directive (Hebrew) including the relevant affidavits, click here.

To read the clarification letter (Hebrew), click here