The Reason and Effects for Voluntary Disclosure

The last voluntary disclosure procedure, which allowed the Israelis to report their “black” capital and pay tax for it without being held criminally responsible, ended on December 31, 2018 with great success. More than 25 billion shekels were opened in the framework of approximately 7,400 requests for “voluntary disclosure of information”, and the expected collection of taxes is about 3-4 billion shekels.

The new procedure is published not accidentally, but in the midst of an active exchange of information between countries and the intensification of the international struggle against black capital. Israel signed more than 50 conventions on avoidance of double taxation, during which some countries committed themselves to providing information on foreign incomes and money of Israelis. Due to these agreements, information is transmitted to Israel about its residents.

Calculations show that the black economy in Israel accounts for more than 20% of the country’s GDP – an indicator that reflects the loss of the state treasury annual income of 40-50 billion shekels.

Why does the tax allow the disclosure of its “black” capital in this period?

While the penalties for tax evaders are toughened, and shortly before the international exchange of information, the tax one provides another opportunity – perhaps the last one – for refused to repent and report their assets outside of Israel, thereby saving themselves from criminal prosecutions and proceedings. Although the new process has not yet been announced, it is recommended to start collecting documents now and be ready for the moment when the possibility of legalization will be reopened. This is done in order to provide successful disclosure of capital with the payment of minimum taxes and without the risk of being brought to criminal liability.

What do you need to succeed in this process?

The starting point is a description of the monetary history – it must be transmitted with a high degree of reliability, if there is evidence: documents and official papers.

How long can this process last?

On average, the collection of documents for filing an application takes at least three months. It should be borne in mind that after the filing of the application the procedure will be lengthy. Therefore, it is better to send the request as soon as possible.

What documents are relevant?

Reports from banks in recent years are important for confirming financial assets and profitability for certain periods of time. Therefore it is important to require the bank to confirm the documents in the correct form and in the required order, which sometimes can not do without professional help and advice. This can lead to the collection of dozens of different documents, including contracts for real estate transactions, land lots, and many other papers. These documents can be associated with various extracts from foreign registries, including registration in land registries and taxation.

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