Israel's Tax Authority Collects Far Less Than Expected in Voluntary Disclosure Program
Israel's Tax Authority's voluntary disclosure program, designed to encourage individuals and businesses to report undeclared assets and income, concluded on August 31, 2026, with significantly lower-than-anticipated results. The program received only 823 applications to disclose previously unreported assets and income totaling approximately 1.89 billion shekels. The estimated tax revenue generated from these disclosures is a mere 152.6 million shekels. Notably, about half of all applications were submitted in the final month of August 2026, indicating a last-minute rush.
Experts suggest the program's disappointing outcome stems largely from the elimination of the "anonymous track," which previously allowed tax professionals to negotiate with tax officials on behalf of clients without initially revealing their identities. The current procedure requires full disclosure from the outset, deterring many taxpayers who fear that rejected applications could lead to criminal prosecution. This lack of a safety net discouraged widespread participation across various sectors.
The cryptocurrency sector, initially identified as a key target with an estimated collection potential of 2 to 3 billion shekels, saw particularly low engagement. Only 203 applications related to digital assets were filed, reporting about 482.5 million shekels in assets and an estimated 51 million shekels in tax. This underperformance in crypto is attributed not only to the anonymity concerns but also to the market's downturn during the program's duration, making it less attractive to liquidate assets and realize profits. Additionally, some crypto assets were considered "on paper" and not yet subject to tax liability.
Historically, similar voluntary disclosure programs in Israel between 2011 and 2019 handled around 9,000 cases and collected approximately 5 billion shekels, averaging about 770 million shekels annually, a rate nearly five times higher than the current program's results. The real estate sector led in the number of applications, with 324 cases concerning undeclared rental income, reporting assets of 358.2 million shekels and an estimated tax of 32.3 million shekels. This highlights the ongoing issue of tax evasion in the rental market, where income below a certain threshold is exempt from reporting requirements.
Overseas bank accounts attracted the most reported capital, with 197 applications disclosing assets worth about 623.1 million shekels and an estimated tax of 41.9 million shekels. While holding foreign accounts is legal, profits are taxable, and individuals with foreign assets exceeding approximately 2 million shekels must file a full annual report. The applications primarily addressed previously unreported accounts or income derived from undeclared sources. The Tax Authority noted that amounts are based on initial declarations and have not yet been fully verified.
