Israel Tax Authority Expects Low Revenue From Voluntary Disclosure Program

Israel's Tax Authority anticipates collecting 152.6 million shekels from undeclared assets totaling 1.89 billion shekels, reported by taxpayers during a voluntary disclosure program that concluded on August 31. This program allowed individuals to report previously undisclosed assets while paying only civil taxes, avoiding criminal proceedings for tax evasion.

The collected amount is considered insignificant compared to the state's overall tax revenue, which reached 522.6 billion shekels last year and 53.3 billion shekels by July of this year. For context, a reduction in fuel excise duty implemented recently will cost the state 1.8 billion shekels.

Previous voluntary disclosure programs, held between 2011-2012, 2014-2016, and 2017-2019, processed approximately 9,000 cases and generated a total of 5 billion shekels in taxes. This averages to about 625 million shekels annually in nominal terms, four times the amount expected from the current program.

The Tax Authority received 823 applications for the recent program, with half submitted in the final month. The most common areas of disclosure involved rental income, digital assets, and foreign bank accounts. Rental income disclosures accounted for 324 applications, reporting 358.2 million shekels in assets and an estimated 32.3 million shekels in tax. Digital assets comprised 203 applications, with 482.5 million shekels in assets and an estimated 51 million shekels in tax. Foreign bank accounts were reported in 197 applications, covering 623.1 million shekels in assets and an estimated 41.9 million shekels in tax.

Other reported assets included capital gains, inheritances, business income, and diamonds. The Tax Authority noted that the reported figures are based on taxpayer declarations and may not reflect the final tax amounts, as negotiations often lead to different final assessments.