"The Panama Papers are an excellent source of information for us," Israel Tax Authority director general Moshe Asher told "Globes." "We're checking the information that has been officially published. We'll go over everything and cross-reference it with the information we know."
The international media today reported that tax authorities in Australia had begun checking information pertaining to Australian citizens appearing in the documents published yesterday by a coalition of 100 media agencies. The documents, which originated in a leak from Mossack Fonseca, a Panamanian law firm, concern the activity of 214,000 offshore companies registered in various tax shelters and controlled by individuals from 200 countries. It is believed that this database, which spans 11.5 million files, contains particulars about several hundred companies controlled by individuals from Israel subject to taxes from the Tax Authority.
"Globes": In your opinion, will you discover people you did not know about?
Asher: "We'll check it against the reports in Israel. In my experience, I can say that we have reports in some of the cases, but I assume that a considerable proportion will be cases on which we have no reports. Israeli individuals can found companies as offshore tax shelters and use them for their operations. That's legitimate, as long as they report it. We have to check how they reported in their personal reports in their declarations of capital."
Do they have to report the founding of the corporation?
"There is no requirement to report the founding of a corporation. You can even found a corporation on the Internet. As far as transferring money to the corporation, in the most recent Knesset winter session, we passed legislation requiring anyone transferring over NIS 500,000 overseas in a year to report it. Beyond that, however, there is a duty to report any income received from overseas, including through corporations registered overseas."
Are documents published on the Internet admissible as evidence?
"You have to see the original documents. Insofar as the documents are authentic - say e-mails and bank records - it will be difficult for the customer to claim that it wasn't him.
OECD trying to close loopholes
The Organization for Economic Cooperation and Development (OECD) last year announced a plan to consolidate principles in state tax legislation in order to close loopholes that have enabled international corporations to avoid paying taxes. The OECD believes that governments throughout the world are losing $100-240 billion a year in tax income because of tax planning by international corporations, based on the transfer of activity to tax shelters. The Panama documents refer primarily to wealthy individuals, about whom much less is known than about corporations.
Is it true that countries are having problems dealing with tax shelters?
"It's true, but there are all sorts of ways to handle such things. There are countries that are writing conventions for exchanging information with those tax shelters, but you have to realize that in the end, most of the bank accounts aren't in the tax shelters; they're in the legitimate countries. If a bank does its work the way it should, it has to reach the beneficial owner of the account, i.e. the Israeli or Dutch individual. When you exchange information, it refers to the beneficial owner of the bank account."
The Tax Authority last year succeeded in obtaining two lists with the names of thousands of Israelis holding accounts at Swiss bank UBS. Four indictments have been filed to date following this exposure, but its main contribution was in strengthening deterrence. 4,400 individuals have completed voluntary disclosure proceedings since the beginning of 2015, in which they disclosed their accounts in exchange for immunity against criminal proceedings. The Tax Authority's proceeds from these disclosures totaled NIS 16 billion.
The Tax Authority recently received another list of account owners from a Swiss bank, and is in advanced negotiations to obtain a list from a third bank. The Tax Authority expects a great deal of information through the multilateral convention Israel joined for exchanging information, following legislation approved in the most recent Economic Arrangements Law. In addition, the Tax Authority recently hired a private company specializing in data mining on websites.
Published by Globes [online], Israel business news - www.globes-online.com - on April 4, 2016
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