March 31, 2014

On January 29, 2014 a government bill was published regarding exchange of information between Israel and other countries (hereinafter “the Bill "), that do not necessarily have a double taxation agreement with Israel. The Bill describes conditions and limitations for the exchange of information and assistance between the two countries.

It is important to note that under no circumstances will information be transferred if by transferring it, it can danger the security of the State of Israel, public peace or defense, a pending investigation or other important matters.

According to the proposed Bill, the transfer of information will be contingent to three conditions which are aimed to protect the taxpayer whose information is being shared:

1. The Israel Tax Authority itself may use the information to enforce the tax laws of Israel and the information is required in order to enforce the tax laws of the other country.

2. The international agreement stipulates the obligation for the other country to preserve confidentiality and the security of the information.

3. Information is transferred on condition that the other country uses it only for the enforcement of its tax laws.

This Bill is part of Israel’s Tax Authorities continuing efforts to increase enforcement of Israeli citizens to report and pay taxes on their income and especially those derived from offshore bank accounts and assets.