Tax Authority head Moshe Asher says a decision is being made to exchange bank account data between Israel and the US. This is already old and cold information garnered from an email we received from Shmuel Fedder’s Financial Resource Network here in Israel. It was passed on to him by Chaim Wigoda who repeated what was reported originally by Ela Levy-Weinrib in Globes, one of Israel’s daily financial newspapers back on the 6th of February. Nobody should be surprised as the US Treasury is signing bilateral agreements with dozens of other countries. As far back as nearly two years ago, in a previous article on this blog, entitled, IRS Targets Israeli Expats, we wrote that Bank of Israel Governor Stanley Fischer was considering asking the cabinet to reach a tax agreement with the United States to help allay Israeli banks’ fears regarding strict new U.S. tax regulations for Americans living abroad. Once again FATCA fans fear in the international banking system by forcing them to spend more in order to go to extraordinary additional reporting account details of their customers. This method of bilateral reporting allows Israeli financial institutions to report to the Israel Tax Authority, who will, in turn, pass the information on to the IRS, who will, in return, exchange information on Israeli’s accounts in the USA. As we have said before, everyone will know everything about everybody. Their hope is that tax evasion will cease and desist. This is great, but unfortunately, it is all based on citizen-based taxation which is only practiced in the United States. All other countries base their taxation on residence. Read more about this on the American Citizens Abroad website, especially their position paper that they presented to the United States Senate Finance Committee.
Of course, this concerns expats, but I emphasize their use of the term “bilateral.” Through this agreement, the IRS will also report to Israel’s Tax Authority, the financial holdings of all Israelis in American financial institutions. This will include expats as well as non-US persons. “The trend at the banks to examine the accounts of their customers over tax payments is spreading. This is the trend of the US against Switzerland at the moment, but it is expanding to many countries, including Israel,” said Israel Tax Authority director general Moshe Asher at the conference of the Association of Public Companies in Israel and BDO Ziv Haft at the Tel Aviv Stock Exchange (TASE) today. “A decision is being drawn up to exchange information about bank accounts between Israel and US. Following discussions with the Ministry of Justice, a bill will be proposed to allow us to sign a tax convention with other countries on the exchange of information. In this way, we will be able to obtain information on Israelis overseas.”
Asher’s remarks followed Wednesday’s report by “Globes” that Bank Leumi has begun sending letters to European customers asking them to present documentation from their countries of origin that the money deposited in accounts at the bank has been reported to the tax authorities.
This is all part of the efforts of all governments to increase their income by plugging the leaks in their tax systems. All countries exist on a deficit basis, spending more than they are taking in. This resulted in national financial crises all over the world, and, especially noteworthy in recent memory, in Greece, Ireland, Portugal, and Spain. In this effort spearheaded by the United States, they all see the solution to their financial problems in enforcement of their existing taxation laws. Nobody demonstrates or riots because of this, as opposed to cutting expenses, chopping welfare, or trimming the fat from their budgets. If, as, and when, I go into a budget deficit, I spend less. They tax more.
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