Home News & Events TAX LAW NEWS: Israel signs FATCA with United States

TAX LAW NEWS: Israel signs FATCA with United States

Sunday, 06 July 2014 14:49

Earlier this week, the Israeli Finance Ministry announced that Israel has joined other eighty [80] countries by signing the Foreign Account Tax Compliance Act, or FATCA, by means of which the signatories have agreed to fight offshore tax evasion by providing relative information on bank accounts and other financial assets held by US citizens residing in Israel to the Internal Revenue Service. In exchange the Internal Revenue Service would relate information about Israeli citizens' US-based accounts to Israel's tax authority.

The FATCA, which was adopted in 2010, requires foreign financial institutions to report accounts of American citizens directly to the Internal Revenue Services. The implementation of FATCA threatens to violate privacy laws in many countries, and has even resulted in some European banks cancelling or limiting services for US citizens.

As a result, many countries have, like Israel, signed agreements with the US allowing their local tax authorities, rather than the financial institutions themselves, to report relative information.

Frida Israeli, Vice Director for State Revenue within the Israel's Finance Ministry, is quoted to have said in a statement, that "the agreement is a milestone in the international cooperation of tax authorities to exchange information".

The FATCA agreement with Israel, where there are some 250,000 US citizens, is scheduled to come into effect on Sept. 30, 2015.

Source: IFC Review