Tax Amnesty helps taxpayers bring things up to date.
Applicants must be named, and have sufficient paperwork.
The Israeli tax Authority (ITA) issued on September 1, 2025 some clarifications that try to patch up problems with the new Israeli tax amnesty (voluntary disclosure procedure) announced on August 25, 2025. What are the problems, what is the patch, and is the amnesty now workable?
New amnesty – potted summary:
In applicable cases, the ITA in conjunction with the Attorney General’s Office is willing to commit to refrain from initiating criminal proceedings against anyone who makes a voluntary disclosure if they meet all the conditions. These conditions are contained in Standing Rules and are further explained in ITA Operating Instructions (10/2025).
Anonymous amnesty requests will not be accepted, tax is not reduced and there is no automatic relief from fines – mitigating circumstances must exist.
The amnesty has a broad coverage including income tax, capital gains tax, real estate taxes, VAT, import taxes, cash transactions over permitted limits and various money laundering offenses.
For income tax cases, there will be a regular track and a fast track (“green track)”. The fast track is for smaller cases: (1) financial assets in a foreign financial institution below NIS 4m at the end of 2024, and there were no deposits or movements in the amnesty period (not apparently defined); (2) Unreported rental income in Israel and/or abroad not more than NIS 250,000 per year; (3) Unreported income from digital (crypto) assets not more than NIS 500,000 and their fair value at the end of 2024 didn’t exceed NIS 1; and (4) a combination of the above.
The amnesty is available until August 31, 2026.
What is the problem?
Anonymous applications aren’t allowed this time, amnesty applicants must be named. If the taxpayer can’t reach an assessment agreement with the ITA, the ITA will issue a “best judgement” estimated assessment. In practice, the ITA’s estimate is likely to be on the high side. In practice, full documentation going back all relevant years can be hard to obtain if a taxpayer doesn’t already have it. But full documentation spanning all years is critical to help avoid a “best judgement” estimated assessment.
Amnesty Clarification:
The ITA clarification deals with situations where an amnesty request collapses.
The Standing Rules stated that if tax is not paid according to the ITA’s determination, the amnesty process is cancelled and the ITA can use the information filed as evidence (i.e. against the taxpayer) in any civil or criminal proceedings.
The clarification says the above rule applies only to payment of undisputed tax i.e. the tax “declared” by the amnesty applicant or agreed with the ITA or ruled upon by a Court if not paid on time. If there is any disputed amount of tax while the amnesty process is still being conducted, non payment of tax should not be grounds, per se, for the ITA to use information obtained from the taxpayer in civil/criminal proceedings.
But the clarification also says ITA may use in proceedings any information: (1) obtained in any other way, (2) where the disclosure was not full and frank and done in good faith.
In regard to best judgement estimated assessments, the Standing Rules referred to Income Tax Ordinance (ITO) sections 152-154, but the clarification expands that to include sections 150A -158. No reason is given but we can see why.
Section 151 allows the ITA to open an investigation under oath or not under oath.
Moreover, regulations promulgated under Section 158 authorize a Court to admit evidence supporting a tax assessment or tax return even if the evidence would be unacceptable in a civil proceedings. This implies that a Court can admit a “best judgement” estimated tax assessment as evidence……
Comments:
The ITA and Israeli Justice Ministry initiated the latest tax amnesty to help finance the war.
The ITA amnesty clarification has to be read between the lines. Undisputed tax should be paid. Strenuous attempts may be needed to conjure up sufficient paperwork and to keep the amnesty process going. Otherwise, a best judgement estimated assessment may be issued which a law court may later admit.
To sum up, if all the paperwork exists, an amnesty request may be worth considering – especially in smaller cases eligible for the fast (green) track.
Next Steps:
If you have Israeli tax skeletons in the closet, please contact us asap for detailed guidance about the amnesty process.
As always, consult experienced tax and professional advisors in each country at an early stage in specific cases.
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The writer is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.
© Leon Harris 30.11.25