The names of the first Israelis arrested based on information from the Panama Papers have been cleared for publication: businessmen Haim Toledano from Tel Aviv and Saar Pilosof from Haifa were arrested before the Jewish New Year by the Tax Authority and released under restrictive conditions. They are suspected of not reporting income of millions of shekels from companies registered in tax shelters abroad.
The arrest of the suspects is part of an investigation run by the Tax Authority's Central District Investigations tax inspector following the publication of the Panama Papers - a collection of 11.5 million confidential documents of a group of lawyers from Panama, leaked by an unknown person and containing information on over 200,000 companies around the world, their shareholders, as well as evidence of extensive financial activity of politicians worldwide.
Toledano, a known figure in the Forex scene, and Pilosof, who headed a group of private investors and investment houses in the past, are directors and shareholders in various companies in Israel and abroad.
The suspicions are that in 2008 Toledano and Pilosof used a firm specializing in this field to open several companies in tax shelters (Anguilla, Belize and the British Virgin Islands), in order to conceal their ownership.
Statements submitted by the suspects to the tax authority allegedly failed to report their ownership of these companies and the bank accounts they held abroad, as well as hidden profits originating abroad worth millions of shekels in 2012-4.
Last month, the suspicions led to a public investigation, including a search of the suspects' homes and offices in which documents and computers linked to the suspicions were seized. Moreover, a safe in Pilosof's home was found to contain NIS 600,000 in cash, in shekels and foreign currency.
These are probably only the first arrests in this affair. The Tax Authority continues investigating the names of Israelis mentioned in the Panama Papers in order to discover Israelis who have not reported their profits. The Tax Authority has even beefed-up operations against non-reporting companies opened by Israelis in tax shelters. Among other things, Tax Authority investigators have raided the offices of Israeli companies providing Israelis with offshore company establishment services, and law firms opening companies abroad for their clients and supporting them in the process. As a result, the Tax Authority holds extensive information on Israelis who opened 1,500 companies in Panama and other tax shelters.
Involvement in a foreign company and holding a bank account abroad are not by themselves a crime or a tax violation, but operations must be reported, a duty that some Israelis with activity abroad fail to keep. The law states that an Israeli national is allowed to hold a bank account abroad, but must report its existence and any resulting revenue to the Tax Authority, including revenue from interest, dividend ands capital gains.
Published by Globes [online], Israel business news - www.globes-online.com - on October 10, 2016
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