The Israeli tax Authorities signed on another tax agreement with the Swiss Finance Ministry. The purpose of the agreement is to pass information about financial accounts from one to another. It’s another example of the significant changes that the world is up to feel in 2017. The “Game Rules” is about to change. The main goal is to increase the cooperation regarding the transfer of information, “egalitarian enforcement” of taxation in Israel and shrink the black money “upon request”.
Mutual Administrative Assistance in Tax Matters (MAAT Convention).
The MAAT convention entered into force in Israel on December 1, 2016 and will enter into force in Switzerland on January 1, 2017, according to the OECD (http://www.oecd.org/tax/exchange-of-tax-information/Status_of_convention.pdf).
The MAAT allows one country to ask for information foreseeably relevant for the enforcement of their domestic tax laws. The The Israeli tax Authorities allowed to request information about specific Israelis with bank accounts in Switzerland, (i.e. Mr X for transaction Y).
The CRS Convention:
This is an electronic system similar to the United States’ FATCA (Foreign Account Tax Compliance Act) system. FATCA mainly covers the accounts of US persons and accounts outside the US. The CRS applies in over 100 additional countries.
The CRS aim for “automatic-exchange” of information by financial institutions of one country to the tax authority of the same country for onward forwarding to the tax authority in each country where the account holder have interests.
To summarize:
It can be seen the ITA will receive information automatically without asking for it, from Switzerland commencing in 2018, and already receiving Information from the IRS.
If you derived undeclared income from a foreign account or US bank account, the account may become known to the ITA in 2017 and almost certainly will in 2018. Moreover, Israeli banks are now required to look out for black money that should have been taxed in Israel or abroad under recent amendments to the anti-money laundering regulations and the tax law.
To sum up, the game-rules have changed. The Israelis, and also the Americans living outside the US, soon will no longer be able to avoid of reporting their income to the ITA or to the IRS.
The FATCA agreements is about to be enforced in the tax year 2017, as signed by the contracting states, come and get our solution for that situation.