The main types of liability for violation of tax laws in Israel
Israel is a country that takes the rule of law in all areas of life very seriously with no exceptions in the rules of doing business. Thus, the Israeli authorities are very attentive to any violations of tax legislation, which, as any businessman knows, is very confusing and can plunge a newcomer into a real stupor. But ignorance of all the nuances – absolutely does not exempt from liability for violation of tax laws. In order not to be taken by surprise and understand the main risks that you take, choosing an unscrupulous accountant or trying to conduct your financial affairs yourself without really understanding them, we have collected for you all the main troubles that an entrepreneur may expect in cases of problems with tax authorities.
The main types of liability for violation of tax laws:
Fines. There are a lot of them, and they come in different sizes. So, for example, the penalty for violation of accounting rules will be equal to one percent of the total trade turnover of the enterprise for the current reporting period. If you have a large company, then the amount will not be small. There are also considerable fines for delays in reporting, for each month of delay, you are required to pay the state an amount of 200 shekels. If the period of such a delay is more than six months, an additional penalty of 0.5% of the total fine is imposed for each week. As a result, an act of simple carelessness can cost you a lot. Even more seriously, the state takes non-payment of VAT by entrepreneurs. For example, an incorrectly written MAAS hashbonite (receipt) is subject to penalties for the entrepreneur in the amount of two times the tax. Induced examples, this is only a handful of financial fines – in fact, they are much larger and their sizes continue to grow every year.
Administrative punishments. If you hope to somehow avoid responsibility for tax violations, we have news for you – the state of Israel also has effective levers of influence on debtors. So, fiscal services can arrest your property or detain it at customs, prohibit you from leaving the country, or even engage in business and provide other services.
Criminal liability. The most serious punishment for malicious defaulters. On March 29, 2016, the Israeli parliament substantially increased penalties for serious tax crimes. So, if before the maximum term of criminal punishment for such acts was up to 7 years, now malicious payers may have to spend up to 10 years behind bars. Fines for serious tax misconduct and money laundering have also increased significantly. Do not forget that in addition, parliamentarians lowered their “threshold of funds” and concealing them would be considered a serious financial crime. So, for hiding income- the amount will now be equal to – 1 million shekels (or 2.5 million for the savings collected over the past 4 years). . For VAT, these figures are much tougher. It is enough to hide only 170,000 shekels a year, or 480,000 shekels in the last 3 years, and your actions will become criminally punishable with a potentially serious term of imprisonment.
As you can see, there are a lot of penalties for tax violations in Israel, and they are very serious. It is not even worth it to be a seasoned criminal and specifically hide the earned money. A couple of oversights in accounting and you can already expect the consequences and unpleasant communication with the fiscal authorities. To avoid such problems and liability for violation of tax laws, it is better to entrust the conduct of their affairs to professionals. In Israel, accounting is best handled by the Shmuel Brodecki Roe Hashbon company.
