Israel Tax Authority Faces Disappointment as Voluntary Disclosure Program Yields Low Revenue

Israel's Tax Authority has reported significantly lower-than-expected revenue from its latest voluntary disclosure program, which concluded on August 31, 2026. The program, active for one year, allowed citizens to report undeclared income and assets, pay the associated taxes, and avoid criminal prosecution. While citizens disclosed approximately 1.89 billion shekels (about $510 million USD) in previously hidden wealth, the anticipated tax revenue is only about 152.6 million shekels (about $41 million USD).

This outcome falls far short of the 2 to 3 billion shekels (about $540 million to $810 million USD) initially projected by the state when the program was announced in August 2025. A key target of the program was to capture taxes from cryptocurrency profits, a sector identified by the State Comptroller as potentially holding around 3 billion shekels in uncollected taxes. However, only 203 applications related to digital assets reported a total of about 482.5 million shekels (about $130 million USD) in wealth, yielding an estimated tax of just 51 million shekels (about $14 million USD).

The Tax Authority's director expressed concern, stating, "The money in the compensation fund is running out. It is likely that next year we will need to bring money from the state budget." The majority of disclosures came in the final month of the program, August 2026. The largest category of disclosed wealth was from rental income, with 324 applications reporting 358.2 million shekels (about $97 million USD) in assets and an estimated tax of 32.3 million shekels (about $8.7 million USD). Disclosures of hidden funds in foreign bank accounts were also significant, with 197 applications reporting 623.1 million shekels (about $168 million USD) in assets and an estimated tax of 41.9 million shekels (about $11 million USD).

Previous voluntary disclosure programs, held between 2011 and 2019, were more successful, collecting approximately 5 billion shekels (about $1.35 billion USD) from around 9,000 cases. The current program's limited success raises questions about its effectiveness in reaching undeclared wealth, particularly within the cryptocurrency market.