Accountants Suspected of Aiding Major Shareholder in Tax Evasion
Translated & summarized from Calcalist by baba
Two accountants are under investigation for allegedly helping a major shareholder of a public company evade taxes by not reporting millions in dividend income and cash withdrawals. The suspects allegedly facilitated the reporting of NIS 16.5 million in dividends at a lower tax rate and failed to declare NIS 14.6 million in withdrawals. The investigation, which began after a review by the Rehovot Income Tax Assessor's office, has led to searches and evidence seizure, with the accountants released under restrictive conditions.
The story in 5 lines · by baba
- Two accountants are suspected of tax evasion for a major shareholder of a public company.
- They allegedly failed to report NIS 16.5 million in dividends and NIS 14.6 million in withdrawals.
- The alleged actions resulted in over NIS 800,000 in lost tax revenue for the state.
- The investigation was initiated by the Rehovot Income Tax Assessor's office.
- The suspects were released under restrictive conditions after appearing in court.
Two accountants for the controlling shareholder of a public company are suspected of failing to report cash withdrawals and dividend distributions made by the owner over multiple tax years. The accountants, whose names are under a gag order, face charges related to tax evasion and negligence. The investigation was initiated by the Rehovot Income Tax Assessor's office, which uncovered evidence of numerous instances of undeclared owner withdrawals and dividend distributions spanning several years. This information was passed to the Central Investigations Income Tax Assessor's office, which launched a probe. Investigators found that the suspects allegedly helped their client file tax returns for 2021-2023 without reporting income as required by law.
According to the Israel Tax Authority, the Income Tax Ordinance mandates a 30% tax rate on dividends received by a substantial shareholder from a company they control. The investigation revealed that the accountants allegedly assisted their client in reporting dividend income totaling approximately NIS 16.5 million. However, this income was reportedly declared in a section of the tax return designated for ordinary shareholders, resulting in the client being taxed at a 25% rate instead of the required 30%. This discrepancy is estimated to have cost the state over NIS 800,000 in lost tax revenue.
Furthermore, the Tax Authority stated that the Income Tax Ordinance considers withdrawals of funds from a company by its shareholder as taxable income, reportable as a dividend, unless the funds are repaid by the end of the following year. The investigation suggests that in 2021 and 2022, the client withdrew approximately NIS 14.6 million from a private company he controlled and did not repay the funds within the stipulated timeframe. The suspects allegedly aided the client in filing his personal tax returns without reporting this NIS 14.6 million withdrawal as dividend income.
The investigation became public on Sunday with searches and evidence seizure. The suspects appeared before the Rishon LeZion Magistrate's Court on Monday, where they were released under restrictive conditions.
