Israel Tax Authorities To Share Information
Israel’s Ministry of Finance has announced that Israel will adopt the OECD procedure for automatically sharing information on financial accounts of foreign residents with other member states. This means that the Common Reporting Standard will be implemented by the end of 2018, requiring banks to swap and transfer information regarding income and assets in Israel.
According to the procedure, financial institutions (for example, banks and insurance companies) will set a process to identify the nationality of account owners. They will then forward information regarding the account holders who are foreign resident to the tax authority. The information will include financial balances and income.
This procedure is similar to the FATCA agreements upon which the USA has signed with many governments, including Israel. However, according to FATCA, financial institutions are required to identify US citizens and residents; as per the OECD policy, identification is based solely on residence. The purpose of these regulations is to combat tax evasion and tax fraud.
It is unclear who will be categorized as foreign residents for the purposes of these OECD procedures, but we will keep our clients informed as we find out more.