Israel tax chief: No more tax hikes needed

Moshe Asher told the Institute of Certified Public Accountants that money can be raised from unreported capital instead.

Israel Tax Authority head Moshe Asher stated clearly today that no new tax hikes were necessary.

Speaking at a conference of the Institute of Certified Public Accountants in Israel at a session about the Tax Authority’s work plan, Asher commented, “We don’t need new taxes. We should get the money from illegal capital, and it’s necessary to give the Tax Authority the right tools to do it.”

Asher outlined the Tax Authority’s goals for the near future, and the actions it is taking to achieve more thorough tax collection and deal with illegal capital. “The Tax Authority has set itself a number of interconnected strategic targets. The first is to significantly increase its sources of information from outside parties. We agreed yesterday with the Land Registry Office that we would receive their records. This information will enable us to cross reference the information with the figures we already have.

“As part of progress in FATCA and multilateral conventions, we expect to obtain information about the financial assets of Israelis overseas. We issued a tender for a company to bring relevant information from the Internet. Later, we’ll become a digital authority – a ‘paperless’ authority. We need technological tools (risk management, business intelligence (BI) that will cross reference all the information sources and pick out the files worthwhile investigating.

“We’re in the process of building up our trained personnel. 180 new inspectors will join us in the first half of the year, and we’re expected a total of 300 new income tax and land tax inspectors and auditors. This will enable us to increase our percentage of audited files. The combination of technology, information, and personnel will provide us with the necessary power,” Asher said.

In recent months, the Tax Authority has been conducting a complex and wide-sweeping investigation into unreported accounts at foreign banks as part of the struggle against an estimated NIS 50 billion in capital illegally concealed by Israelis throughout the world. This includes bank accounts held by Israelis, mainly in Swiss banks, amounting to hundreds of millions of euros.

Among other things, Asher noted, “In the upcoming economic arrangements bill, the Tax Authority will slightly extend the duty to report, and apply it to some of the Israelis residing overseas for a significant part of the year. As either part of the economic arrangements bill or in separate legislation, we will push for a ruling that serious tax violations constitute predicate offenses under the Prohibition on Money Laundering Law.”

Asher continued, “The illegal capital circulating in discounted checks and among currency services providers requires handling, and we want to issue transfer the regulation of this matter, according to a decision by the Attorney General.”

Asher cited other plans by the Tax Authority, including closing loopholes in the law, such as wallet companies, house property companies, and others; securitization transactions; removal of obstacles to real estate investment trusts (REITs), promotion of research and development companies through the stock exchange; and pushing for adoption of the recommendations by the Andorn Committee for evaluating the Law for the Encouragement of Capital Investment.

Commenting on these recommendations, Asher said they were not being published, because “one issue is still in dispute, and will be brought to the minister for a decision.”

Concerning the natural gas dispute, Asher said, “The state’s biggest interest in the gas question is to get the gas out and sell it, and collect the tax, while maintaining reasonable prices.”

He added, “The Tax Authority collected substantially more than the forecasts for the first six months of 2015, without any large-scale transactions. We handled an enormous volume of claims for direct and indirect damages resulting from Operation Protective Edge, and paid over NIS 1.3 billion for indirect damage and NIS 1.4 billion for direct damage.”