Criminal Taxation

Failure to report foreign income by a person is an offense under section 220(1) of the Income Tax Ordinance, which concerns the omission of income from a report. Since 2003, every person who is a resident of Israel for tax purposes is required to report on all of their income, regardless of the location of the income, except in cases where the regulations allow an exemption from filing a tax return.

It should be noted that until the end of 2019, a person who did not report their assets outside of Israel could apply for a voluntary disclosure procedure, under which an opportunity was given to anyone who committed an offense under the Income Tax Ordinance to come of their own free will and in good faith and disclose to the Israel Tax Authority the incriminating information against them and request immunity from prosecution, subject to the payment of taxes not paid in Israel.

The Administrative Offenses Law constitutes a kind of "alternative route" to the classical criminal procedure. In this route, an administrative fine is imposed on the offender instead of filing an indictment against him. It should be noted that, according to the implementation instructions of the Israel Tax Authority, in appropriate cases (for example, offenses under sections 216 and 219 of the Income Tax Ordinance), the administrative fine route should be used first, and only if the administrative fine does not constitute sufficient deterrence and punishment, should the case be handled via the classical criminal procedure.

Israeli tax law permits, in appropriate cases (for example, offenses under sections 215 and 220 of the Income Tax Ordinance), to submit a request for the conversion of an indictment into a monetary ransom. It should be noted that a request for a monetary ransom can be submitted to delay the criminal proceedings, even after the indictment has been filed, subject to the approval of the Attorney General.

When a person is summoned for questioning or arrested and brought in for questioning, he has the right to consult with a lawyer before the start of the investigation. The investigating authority must wait until the arrival of a lawyer on his behalf and not start the investigation, provided that this is a reasonable period of time until the lawyer's arrival. It should be clarified that only in exceptional cases can the investigating authority prevent a person from consulting with a lawyer. If a person did not request to consult with a lawyer before the start of the investigation, he is entitled to request this at any time during the investigation, and the investigating authority must suspend the investigation and wait a reasonable amount of time until the arrival of a lawyer. Consultation with a lawyer before the investigation may have significant implications for the continuation of the proceedings in the case, as at this stage, the lawyer can explain to the suspect what his rights are, advise whether to keep silent or provide his version, and what is expected of him in the further course of the proceedings in his case.