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Legal laundering: the answer to money withdrawals in protest of the reform? - Walla! Of money


The Tax Authority has a plan on how to return hundreds of millions of shekels to the state coffers, through a voluntary disclosure arrangement, which will help tax evaders launder undeclared capital and pay a 5% fine on it

Tax evaders stuck with black money that the bank won't accept?

The state will help them whitewash it for a low fine (Photo: ShutterStock)

While the bank managers report few withdrawals of funds - at least for the time being - in favor of transferring them abroad, against the background of the public controversy regarding the emerging legal reform, others are actually trying to bring funds into Israel, and without success.

Some of them are Israeli tax evaders, who have been stuck with an estimated total number of Billions of shekels abroad, which they are unable to use due to various international regulations passed in recent years, which require the banks to understand the source of the money requested for deposit, and to examine whether it meets the criteria defined by the legislator before accepting it.

Bringing the funds into Israel, however, is not only a narrow interest of the owner of the funds, but also a national interest, since the funds increase the state coffers from both direct taxes and indirect taxes by increasing the volume of economic consumption.

The Tax Authority, therefore, already several years ago started a 'voluntary disclosure procedure', according to which Israeli citizens, who allegedly evaded taxes in the past, either due to a lack of understanding of the law or maliciously, will be able to declare on their own initiative the funds that did not pass the required income test.

The statement allows them to negotiate with the tax authority on the amount of tax required to be paid, thus giving them the opportunity to use the funds as a legitimate source that has been 'laundered' by the state.

According to the income tax data, there have been two temporary instructions of voluntary disclosure until now, when the second procedure also included a special procedure for diamond workers.

As part of the first procedure, the tax authority collected approximately 2.2 billion shekels, and as part of the second procedure, approximately 162 million shekels were collected in the normal procedure along with approximately 1.6 billion shekels in the diamond procedure.

The Tax Authority periodically examines an additional temporary order for voluntary disclosure, but Walla has learned that such a temporary order has been almost fully formed and is currently under review by the attorney's office.

Beyond the approval required by the legal authorities, in order to reduce the criminal element from the whistleblowers, the previous voluntary disclosure practices led to public criticism for not punishing the tax evaders, who also broke the law - and are actually entitled to legal laundering of most of the money they evaded.

Therefore - and in order to reduce the scrutiny, the emerging tax disclosure procedure, which is expected to bring hundreds of millions of shekels into the state coffers, will also include a component of a fine alongside the payment of the tax on the money that disappeared from the state's eye, in the form of additional percentages that will be based on the tax assessment determined by the tax authority.

The fine, however, is not the only obstacle that the evaders will have to overcome: according to the emerging procedure, the tax authority will be able to sue the tax evaders even after the discovery, assuming the parties were unable to reach an agreed assessment.

The claim can only be established if the tax authority succeeds in obtaining documents that prove the disappearance.

Adv. Nava Hans, an expert in the field of tax offenses and money laundering and formerly director of Central District Claims at the Tax Authority (Photo: Dror Sabag)

"It's also worthwhile for the country"

Adv. Nava Hans, an expert in the field of tax offenses and money laundering and formerly director of Central District Claims at the Tax Authority: "According to the Law on the Prohibition of Money Laundering, banks are prohibited from accepting funds whose source they cannot identify or which they are prohibited from accepting under various definitions.

And together with the cash law, which does not allow businesses to receive significant funds in cash, and other restrictions, the funds accumulated by Israeli tax evaders in what they previously considered a refuge, and accumulated mostly under the names of designated foreign companies established for this purpose, have become imprisoned.

The voluntary disclosure procedure has therefore become the new and legal refuge of the evaders, who will be allowed to use it after they have paid the tax required for it.

It is also beneficial for the state because it puts funds into its coffers that it cannot reach.

In the procedure that is taking shape, in contrast to the previous ones, caution should be taken in view of the reference to the criminal procedure on the part of the state, and in addition we must not forget that it is possible to open against the whistleblowers also in the civil procedure, and therefore the procedure must be approached in a correct and orderly manner, along with complete honesty on the part of the whistleblowers - which will also pay off."

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, also from the Tax Authority, added: "Not all tax evaders do it maliciously.

Some of them are not aware of the requirement or received incorrect accounting advice that made them unwillingly, and perhaps even unknowingly, criminals.

It is important to understand that most of those who approach the voluntary disclosure procedure are not chronic tax delinquents or criminal offenders, who find other solutions to move their money and do not rely on voluntary disclosure procedures.

Therefore, in the Western countries there has been for years a regular, orderly and consistent procedure of voluntary disclosure, which allows citizens to correct their mistake, along with a fine paid by them for the mistake they made.

In Israel, in contrast to what currently exists in Western countries, there is no permanent voluntary disclosure procedure regulated by regulations or legislation, and in order to implement it, the tax authority is required to compile it for the requested period, and submit it for the approval of the attorney's office.

The expectation is that the emerging voluntary disclosure procedure will yield revenues to the state similar to those obtained in the normal procedure before it, and it appears that the fine that will be piled on top of the tax percentage that will be required will be approximately 5%.

  • Of money

  • our money


  • Voluntary Disclosure

  • Internal Revenue Service

  • money laundering

  • tax evasion

Source: walla

All business articles on 2023-01-29

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