As the public debates the plan for everyone to file tax returns, the Israel Tax Authority has published a bill to expand filing for a range of financial activity, and proposes a fine of 30% of the tax on top of the full payment for non-filers.
The Tax Authority says that the bill's objective is to tackle the problem of the eroding tax base, which costs billions of shekels in lost tax revenues. It is therefore drawing up a new list of activity requiring tax filing, which it calls "Proposal for a legislative amendment - activity requiring filing". The list has not yet been distributed, and is still only an internal memo, which "Globes" has obtained.
The list proposes 23 criteria requiring tax filing, some of which are new and others are extensions of filing requirements on items deemed "special" or "suspect", included in the tax code since 2006. The activities in the new list include, but are not limited to non-salary income or compensation from an employer as defined by the tax code, such as gifts, compensation for emotional stress and hardship, non-competiveness compensation, and appreciation; revenue from the sale of company stock or activity, or the purchase of stock or activity, such as the sale of intangible assets like goodwill or non-competitiveness.
The Tax Authority said in response, "The Tax Authority believes that aggressive tax planning costs the Treasury hundreds of millions of shekels a year, hence the importance of the Tax Authority's activity to limit its use. Disclosing planning by filing is an accepted practice around the world, including in the US. Therefore, in the last Economic Arrangements Law, the Tax Authority received expanded authority to demand filing of tax planning, in order to put the spotlight on this planning, so that assessors can review its legitimacy, and, if necessary, to prevent the use of extreme planning to ensure that the Treasury will not be harmed.
"The tax planning lists that are now being drawn up are completed, they will be submitted by the finance minister to the Knesset Finance Committee for approval. As for the campaign against unreported black capital, that is a different campaign in which the Tax Authority is also working hard to contain."
Published by Globes [online], Israel business news - www.globes-online.com - on April 24, 2014
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