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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Israel Phase 1 Review

This report for Israel has been published on 31 Jul 2013. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is not in place.   Israel authorises the issuance of bearer shares by companies other than those registered on the stock exchange without having in place mechanisms for identifying the holders of those shares in all circumstances. Only 12 companies have issued bearer shares.  Israel should take necessary measures to ensure that robust mechanisms are in place to identify the owners of bearer shares. 
Under the Income Tax Ordinance, foreign companies that are managed and controlled in Israel are considered tax resident in Israel. However, foreign companies that are managed and controlled in Israel by new immigrants or veteran returning residents are given an exception from this tax residency rule for a period of 10 years and ownership information on such companies is not ensured in Israel.  Israel should ensure that ownership information is available to its competent authority in respect of all foreign companies that are managed and controlled from Israel. 
Israeli law does not ensure the availability of identity information in respect of the settlors, trustees and beneficiaries of foreign resident settlor trusts having a trustee resident in Israel and for trusts created by new immigrants and veteran returning residents which are vested with assets or income from assets abroad for a period of 10 years.  Israel should ensure the availability of identity information in respect of the settlors, trustees and beneficiaries of foreign resident settlor trusts having a trustee resident in Israel and for trusts created by new immigrants and veteran returning residents which are vested with assets or income from assets abroad. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Israeli law does not ensure the availability of accounting records in respect of foreign resident settlor trusts having a trustee resident in Israel and for trusts created by new immigrants and veteran returning residents which are vested with assets or income from assets abroad for a period of 10 years.  Israel should ensure that accounting records consistent with the standard are maintained for foreign resident settlor trusts having a trustee resident in Israel and for trusts created by new immigrants and veteran returning residents which are vested with assets or income from assets abroad. 
Israeli law does not ensure availability of accounting records in respect of activities outside of Israel of foreign companies that are managed and controlled in Israel by new immigrants or veteran returning residents for a period of 10 years.  Israel should ensure availability of accounting records in respect of activities outside of Israel of foreign companies that are managed and controlled in Israel by new immigrants or veteran returning residents. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The AML/CFT laws only require retention of documents attesting the instruction to carry out transactions above the threshold of NIS 10 000 (EUR 2 000) or reported as suspicious transaction to the FIU.  Israel should ensure that transactional information consistent with the standard is available in respect of all transactions carried out by the banks. 
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Israel’s access powers for the purpose of exchange of information under international tax agreements are not provided for explicitly, in all cases, and are only applicable to requests made under double tax conventions.  Israel should ensure that its competent authority has the power to obtain all relevant information pursuant to requests under all exchange of information agreements (regardless of their form). 
The tax authorities’ powers to obtain information from new immigrants, veteran returning residents and the trustees of foreign resident settlor trusts, having a trustee resident in Israel, in respect of foreign source income are inadequate.  Israel should ensure that its authorities have powers to obtain information from new immigrants, veteran returning residents and trustees of foreign resident settlor trusts which might be subject of an information request from its EOI partners. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Israel’s access powers for the purpose of exchange of information under international tax agreements are not provided for explicitly, in all cases, and are only applicable to requests made under double tax conventions.  Israel should ensure that its competent authority has the power to obtain all relevant information pursuant to requests under all exchange of information agreements (regardless of their form). 
Eight of Israel’s DTCs are not in line with the international standard.  Israel should continue its program of renegotiation of DTCs to incorporate wording in line with the OECD Model Tax Convention. 
In some cases time taken by Israel to bring its signed EOI agreements into force was more than 36 months.  Israel should take necessary measures to bring its exchange of information agreements into force expeditiously. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Israel has been approached by at least one jurisdiction to negotiate a TIEA, however, Israel’s law does not allow Israel to give effect to agreements solely for the purpose of exchange of information.  Israel should enter into agreements for exchange of information for tax purposes (regardless of their form) with all relevant partners, meaning those partners who are interested in entering into an information exchange arrangement with it. 
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.