Israel Tax Authority Clamping Down on Offshore Accounts

Hong Kong has become the tax haven of choice for many Israelis with offshore assets. Now, the Israel Tax Authority is seeking to implement an information exchange with the Chinese territory

Keeping one step ahead of the tax collector, Israeli citizens have been moving assets from offshore accounts in Switzerland to accounts in Hong Kong, according to interviews with several tax experts and lawyers.

 

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Now, the Israel Tax Authority is seeking to reach an information sharing agreement with the semi-autonomous Chinese territory.

Hong Kong

On Monday, the Authority’s director, Mosher Asher, returned from a visit to Hong Kong where he met with the local tax commissioner to discuss the automatic exchange of tax data between the two bodies. Such an exchange would enable the authority to learn about Hong Kong accounts owned by Israeli citizens.

 

During the same trip, Mr. Asher also traveled to Singapore to meet with his counterpart Tan Tee How and learn about a new local tax data analysis unit. The Israel Tax Authority is currently preparing to establish such a unit.

 

“The Tax Authority has begun implementing active steps to expose bank accounts held by Israelis in place that are considered to be tax havens,” said Guy Hen, a lawyer and certified accountant at the law offices of Sagi & Co. “These steps and the establishment of automatic information exchanges between Israel and other countries is designed to find unreported assets.”

 

In September 2018, Israel will start automatically share its tax information with other countries as part of an OECD-sponsored multilateral tax agreement. Tax official hope that the agreement will encourage Israeli citizens to cooperate and declare foreign-held assets.

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The Israel Tax Authority is expected to open up its voluntary disclosure procedure for new submissions in the next few weeks, in the hope of getting more people with unreported assets to disclose them.

 

“The solution for those Israeli is to settle their debts as part of the voluntary disclosure procedure,” Mr. Hen said.