The Tax Authority allows taxpayers, businesses, individuals, corporate officers, and representatives to correct past reports and report true data through the voluntary disclosure procedure. The procedure is intended to encourage reporting of undeclared capital, income, or tax liabilities, while offering protection from criminal proceedings regarding the tax offenses for which disclosure was made, subject to full compliance with the procedure's terms. The temporary order came into effect on the date of its publication, August 25, 2025, and will be available to the public until August 31, 2026.
Criminal immunity requires meeting specific and clear conditions. The disclosure must be truthful, complete, and made in good faith. The request must be made before an investigation or inquiry into the applicant, their spouse, companies under their control, or partnership accounts has been opened by the Tax Authority or any other enforcement agency. Additionally, at the time of the request, the Tax Authority must not possess any information related to the application, including concerning these parties. Threshold conditions also include having no prior conviction for tax offenses, not having paid a fine for a tax offense, and not having a previously approved voluntary disclosure request.
The submission process is conducted online only through the personal area on the Tax Authority's website. It is submitted to the Senior Deputy Director of Investigations and Intelligence at the Tax Authority, who is the authorized body to approve the request. Applicants are required to detail all relevant information, including the applicants' names, relevant tax years, source of undeported assets, source of income, amount of capital or income not reported, and an estimate of the tax due. The declaration appendix, fully completed and signed, must be attached to the request, along with relevant documents such as bank statements, balance and transaction statements, inheritance orders, or any other document required to support the request.
After reviewing the request, the authorized party may approve it subject to payment of the tax to be determined within the framework of the civil treatment. An approved request is transferred to the relevant civil authority, such as a tax assessor, regional VAT manager, land tax administrator, customs official, or other appropriate authority, as well as to the undeclared capital disclosure department in the professional division. The civil treatment may be carried out by receiving reports or amended reports, or through an assessment process. Within this framework, the amount of tax payable will be determined, including principal, indexation differentials, interest, civil penalties, and financial sanctions if applicable according to the provisions of the law.
The procedure sets clear timelines for further treatment. When it is decided that the treatment will be carried out through reports or corrective reports, they must be submitted within 90 days of the decision on how to handle the request. When the treatment is carried out through an assessment procedure, the assessment agreement or the best judgment assessment will be determined within one year from the date of approval of the request, unless the period is extended by the authorized body. Payment of the full tax by the appointed date is a necessary condition for not opening a criminal investigation regarding the request.
As part of the application form, the applicant is also required to provide information regarding certain types of assets and income, including financial assets held outside of Israel, rental income, and digital assets. Depending on the type of disclosure, supporting documents such as bank statements, rental agreements, work papers for profit calculation, and asset valuation references must be attached.
The procedure applies to tax offenses detailed in Appendix A, including offenses under the Income Tax Ordinance, Value Added Tax Law, Land Appreciation Tax Law, Customs Ordinance, Purchase Tax Law, Law for the Reduction of Cash Use, and additional laws. However, the procedure does not apply to income originating from illegal activity, and criminal immunity will only apply to information provided within and in connection with the voluntary disclosure process. Honest and full cooperation with the Tax Authority is a central condition for advancing and completing the procedure according to the requirements of the procedure.
Barazly Firm offers you rich experience and expertise in managing complex voluntary disclosure proceedings. Contact us to schedule a discreet consultation to review your situation and arrange for disclosure in a professional, responsible, and organized manner.
