A new amendment to the Israeli Income Tax Law will enable the Tax Authority to receive information from tax havens. The government will have power to sign information exchange agreements that allow the Israel Tax Authority to share information with tax authorities of countries around the world and specifically with tax havens, and obtain information on foreign bank accounts.
Under present law, the Israel Tax Authority can only get information with through tax treaties. Israel has no tax treaties with tax havens, such as BVI and Cayman Island, which do not impose taxes on foreign residents. Actually, the Israel Tax Authority cannot get information under current law on the money and assets of Israelis in these countries.
The new tax law will empower the Israeli government to enter into information exchange agreements in particular with tax havens. The objective of the new amendment is to combat undisclosed capital held by Israelis overseas, which is estimated at hundreds of billions of dollars, and to bring it into the Israeli tax net.
Israeli residents who have not yet disclosed their foreign income and assets to the Israel Tax Authority must do so before the new amendment to the Income Tax Ordinance is passed and comes into effect.
It is the last opportunity to submit a request to the Israel Tax Authority for voluntary disclosure, which grants immunity from criminal prosecution with a tax settlement. When the new amendment to the Income Tax Ordinance will come into effect, the Israel Tax Authority may obtain the information and there will be no more criminal immunity. See also: Israel's new voluntary disclosure of offshore income