The Israel Tax Authority (ITA) recently received information of approximately 30,000 accounts owned by Israeli residents that were held in financial institutions in the United States during 2014. This list is added to the previous information that was released by the United States in January of over 35,000 accounts owned by Israeli residents that were held in financial institutions in the United States during 2015, and to the account information of 8,000 Israelis obtained from HSBC Switzerland recently.

This transfer of information is part of the implementation of the FATCA agreement that was signed back in 2014 between Israel and the United States and approved by the Israeli legislation last year.  During the last months of 2016, and as part of the FATCA agreement between Israel and the United States, the ITA transferred to the United States Internal Revenue Service (IRS) data relating to Israeli financial accounts owned by American residents/citizens, during 2014 and 2015. In exchange, and beginning in January 2017, the ITA received information from the IRS relating to Israeli residents holding accounts in financial institutions in the United States.

The procedure of receiving financial information relating to Israeli residents that own accounts outside of Israel through FATCA, is part of the increasing efforts of the ITA to expose unreported worldwide income of Israeli tax residents including through other countries via the Common Reporting Standard.

The Common Reporting Standard, otherwise known as the CRS, is the global standard for automatic exchange of financial information as developed and initiated by the OECD. Israel signed on the Multilateral Competent Authority Agreement on November 25, 2015, as part of Israel’s commitment to meet international standards regarding tax enforcement.  During May 2016, the ITA signed on the Competent Authority Agreement in order to establish the rules and procedures necessary in order to implement the CRS agreement. According to this agreement, Israel is anticipated to begin to transfer 2017 end-year financial information with various countries by September 2018.

In order to efficiently process the vast amount of information, which the ITA will be receiving on a yearly basis, the Israel Tax Authority director Moshe Asher created a dedicated task force which includes representatives from the ITA’s international, intelligence, and investigation divisions.  The information will be compared against the information the ITA receives via FATCA, and eventually through CRS, with the information reported by Israelis on their tax returns, after which, it will be transferred to the investigative and intelligence units and the tax assessment offices accordingly, for further handling.

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