The Israeli Tax Authority (the "ITA") published today (December 12, 2017) a new Voluntary Disclosure Procedure (the "VDP") which shall remain in force as of today until December 31, 2019. In summary, the VDP enables taxpayers to apply for a voluntary disclosure procedure in three main routes:

Regular Route. Under this route, the taxpayer should submit an application to the Investigations Department of the ITA. The application should include the taxpayer's details, as well as full information regarding any undeclared income.

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. This route will be in force until December 31, 2018.

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, then 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.

Under certain conditions, the VDP procedure provides the taxpayer with immunity from criminal proceedings. The main condition which applies under the VDP is that at the time of submitting the application, no investigation or examination of any kind is being conducted with regard to the taxpayer. In addition, at the time of the submission of the application, the ITA is not in a possession of any information concerning the undeclared income of the taxpayer or such taxpayer's spouse, companies, partnerships.

The VDP does not provide any reduction of the applicable tax liability and taxpayer is required to pay the applicable tax liability on the declared income.

This new VDP procedure is very important in light of the expected exchange of information under the Common Reporting Standard (CRS) and it provides taxpayers who have not properly declared their income with a last opportunity to do so before the ITA receives their information under the CRS.