The Israeli Tax Authority is pursuing the arrests of Israeli citizens who have registered companies in tax shelter jurisdictions and overseas bank accounts on suspicion of tax evasion. Information on these Israeli citizens and their holdings has been obtained from a variety of sources, namely the Panama Papers and a leaked list of customers at UBS Switzerland. This has led to the interrogation of dozens of Israelis who failed to report their holdings appropriately. A number of indictments have been pursued, as under Israeli law, a citizen must report all overseas holdings and the income produced from them to the Tax Authority.
The fifth of this string of Israelis to be detained in relation to tax matters, Tel Aviv diamond dealer Hanan Itzhakov was arrested earlier this month on charges related to tax evasion. The charges specifically relate to Itzhakov’s HSBC Switzerland bank accounts, which were reportedly not disclosed to the Israel Tax Authority. The bank accounts in question, some of which were under the sole ownership of Itzhakov and some of which he and his children jointly owned, allegedly contained roughly $4 million.
Following his arrest, Itzhakov reportedly told tax assessors that the peak amount in his Swiss bank account was roughly $6 million and that he did not report the account itself nor the income it generated because he was not aware that Israeli law required him to do so. The Tax Authority was able to locate his accounts thanks to a leaked document that showed the names and account details of over 8,000 Israeli citizens with bank accounts in Switzerland.
Prior to Itzhakov, four brothers in the diamond business were arrested on suspicions of hiding $21 million in offshore accounts. The brothers, who denied the charges, were released on bail after handing over their passports. Like Itzhakov, the brothers left the foreign accounts off their tax records and did not report any of the income these accounts generated. It remains unclear if the Tax Authority has further plans to arrest citizens on charges of tax evasion; however, experts say that it is likely.
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