Op-Ed: What You Should Know About Income Tax Amnesty Extension
Jeff Broide, CPABroide and Co. (www.broide.com) is a Jerusalem-based CPA firm, providing accounting, auditing, taxation, management and business consulting services to clients in Jerusalem and the Greater Tel Aviv areas.
The Income Tax Amnesty ("Voluntary Disclosure Program") enables taxpayers who, for whatever reason, did not report foreign income and assets to do so now, and under favorable conditions. Following the Tax Reform of 2002, taxes are payable in Israel on worldwide income as of 2003, or possibly earlier.
The Income Tax Authority ("ITA") has announced that applications for the amnesty may be submitted up to September 27, 2012 – an extension of the previous date of June 30th.
This voluntary disclosure procedure applies to the reporting of foreign income from assets received as inheritance or gifts, or from foreign assets acquired from local or foreign sources on which taxes were paid or were not subject to tax in Israel, or income from foreign assets which were subject to tax as of 2003.
Under the amnesty, the ITA has provided for immunity from criminal proceedings, waiver of penalties and interest charges; linkage differences may be waived, but this is discretionary.
Applications may be made anonymously; these will be reviewed by the special committee. The application must provide details of the assets and the source thereof, and of the income. As the application is anonymous, it must include details of the documentation to be provided. Information regarding all foreign income and assets are to be provided. After approval of the application, full disclosure of the applicant and documents will be required.
From our experience with submission of applications, the preparatory work is lengthy, so time is of the essence.
Summary of changes:
· Effective 15.11.11 – 30.06.12
· Immunity from criminal proceedings and waiver of penalties, interest and possibly linkage
· Special Committee will review applications under Voluntary Disclosure procedures
· Applicable, in particular, to unreported income from foreign assets received as inheritance or gifts, or from foreign assets acquired from local or foreign sources on which taxes were paid or were not subject to tax in Israel, or income from foreign assets which are subject to tax as of 2003
· Information from an application that is not approved will enjoy tax criminal and civil immunity
2012 TRACHTENBERG COMMISSION MAJOR TAX CHANGES
· Tax rates for companies and individuals are increasing in 2012 – therefore urgent tax planning is required
· Similarly increased taxes on capital gains…maybe sell now and pay lower taxes now
· Premium tax on high income earners…therefore rethink income strategy
· Due to these changes, incorporating may not be the best idea
Information received from: Broide and Co. (www.broide.com), a Jerusalem-based CPA firm, providing accounting, auditing, taxation, management and business consulting services to clients, based in Jerusalem and the Greater Tel Aviv areas.