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OrdinanceTax Law

Income Tax Ordinance [New Version]

פקודת מס הכנסה [נוסח חדש]

Published: 1961-04-25Last amended 2026-06-08✓ Amendment status checked against the Knesset legislation record on 2026-09-04
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More

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Chapter II: Power to Obtain Information

Power to Require Returns, Information, Records, etc.§

135.

In order to obtain full knowledge of a person's income —

(1)
(a)an assessing officer may require the person, by written notice, to furnish any return to be specified in the notice, including a return on the assets and property of that person, or of the person's spouse and their children in respect of whom they are entitled to credit points or pension points, or on assets in respect of which the person serves as trustee for another person; however, that person may refrain from including in the return the assets and property of their spouse, if they attach a declaration signed by that spouse stating that the spouse will submit a separate return on their assets and property; where such a declaration has been submitted, the return shall be submitted by the date by which the spouse is required to submit the said return; every return under this paragraph shall be delivered to the assessing officer by the date specified in the notice, provided that in respect of a capital return no date shall be prescribed that is before the end of 120 days from the date to which the capital declaration must relate or from the date of the demand, whichever is the later; and the assessing officer may also require the person to appear before the assessing officer — personally or through a representative — and to furnish all particulars required by the assessing officer for the purpose of ascertaining the person's income, and to bring for inspection records, documents, accounts and returns that the assessing officer deems necessary; however, the assessing officer — excluding an assistant assessing officer and a chief collector — may require personal appearance, whether with or without a representative, as the person chooses;
(b)(Repealed)
(2)an assessing officer, or another officer authorised by the assessing officer in writing, may enter any place in which a business or profession or vocation is conducted and examine business stock, cash, machinery, records, accounts, documents, files and other certificates relating to that business or profession or vocation, and require explanations in connection therewith, and may also require the owner of the business or profession or vocation or a responsible official thereof to disclose where records, accounts and documents as aforesaid are located and to enter the place where they are situated and examine them and require explanations, if this appears necessary to ensure compliance with the provisions of this Ordinance or to prevent evasion of compliance with those provisions;
(3)an assessing officer, or a person authorised by the assessing officer in writing, whilst conducting an inspection as referred to in paragraphs (1) or (2), may seize books, accounts, documents, files and other certificates relating to that business or profession or vocation, if satisfied that this is necessary to ensure the execution of this Ordinance or to prevent evasion of its provisions; provided that anything seized —
(a)shall not be removed from the place of seizure except pursuant to an instruction of the assessing officer; for this purpose, "assessing officer" — excluding an assistant assessing officer and a chief collector;
(b)shall be returned within three months of the date of seizure, if no criminal prosecution for an offence under this Ordinance has been instituted before then;
(4)an assessing officer may summon any person who has a business connection with the taxpayer and who, in the assessing officer's opinion, is able to testify on matters of income, to appear before the assessing officer and examine that person under oath or not under oath, and may require such a person to deliver to the assessing officer documents relating to that income, provided that an official, authorised person or employee of the taxpayer or any other person employed in the taxpayer's affairs on the basis of personal trust shall not be examined except at the taxpayer's request, and the assessing officer shall also not, on the assessing officer's own initiative, examine the spouse, children or parents of the person liable to tax.

Power to Require Information on Suppliers and Customers§

135a.
(a)The owner of a business or profession or vocation is required, if so demanded by the assessing officer, to furnish to the assessing officer information and documents concerning the owner's business relations with the owner's suppliers, customers or persons with whom the owner has business relations, even though such information and documents are not required for the purpose of ascertaining the owner's own income; however, if the owner notifies the assessing officer within 15 days of the date of receipt of the demand that this involves substantial administrative work, the owner is required to enable the assessing officer to collect the said information and documents personally.
(b)Nothing in subsection (a) shall oblige a lawyer, physician or psychologist to disclose information or documents in respect of which the person is bound by a duty of confidentiality under any law.

Obligation to Submit a Return by a Body of Persons Whose Business Control and Management are Exercised by a Veteran Returning Resident or a New Resident of Israel§

135a1.
(a)Without derogating from the provisions of this Chapter, an assessing officer may require, by written notice, a body of persons that under paragraph (b)(2) of the definition of "resident of Israel" or "resident" is not regarded as a resident of Israel because the control and management of its business are exercised in Israel by an individual who became a new resident of Israel or who became a veteran returning resident, or by a person on behalf thereof (in this section — the body of persons), to furnish to the assessing officer a return or information under section 131 or section 135; a return or information as aforesaid under this section shall be delivered to the assessing officer by the date specified in the notice, provided that in respect of a return under section 131, no date shall be prescribed that is before the end of 90 days from the date of the demand, and in respect of a return under section 135 — before the end of 120 days from the date of the demand.
(b)For the purpose of submitting a report under this section, a body of persons shall maintain documentation in accordance with generally accepted accounting principles.

Definitions for the purposes of sections 135c to 135g§

135b.

In sections 135c to 135g –

"USA" – the United States of America;

"account holder", in respect of a financial account that is not a cash value insurance contract or an annuity contract – a person registered as the holder of the account or a person whom the reporting Israeli financial institution identifies as the holder of the account, and if a person who is not a financial institution holds a financial account of another person or for the benefit of another person, that other person shall be regarded as the holder of that account; and in respect of a cash value insurance contract or an annuity contract –

(1)until the vesting of the right to payment under the contract – a person entitled to withdraw the cash value or to change the beneficiary, and if there is no such person, each of the following:
(a)the insured or a person named in the contract as the holder of the contract;
(b)a person with an irrevocable right to payment under the contract;
(2)upon the vesting of the right to payment under the contract – any person entitled to payment under the contract;

"controlling shareholder" –

(1)in an incorporated body of persons – as defined in the Prohibition on Money Laundering Law, 5760-2000;
(2)in an unincorporated body of persons – as stated in paragraph (1), with the necessary modifications;
(3)in a trust to which Chapter IV 2 in Part 4 applies – the settlor, the trustee, the trust protector or the beneficiary as defined in section 75c, and if any of these is not an individual – the individual who is a controlling shareholder thereof as stated in paragraphs (1) or (2), as the case may be;
(4)in a legal arrangement that is not a trust as referred to in paragraph (3) – an individual whose status in the legal arrangement is similar to the status of any of those listed in paragraph (3);

"international agreement" and "information exchange agreement" – as defined in section 214a;

"implementation agreement" – an agreement for the implementation of information exchange pursuant to an international agreement, based on the procedure for automatic exchange of information on financial accounts published by the Organisation for Economic Co-operation and Development (the OECD);

"FATCA agreement" – the agreement between the State of Israel and the USA regarding the improvement of international tax compliance and implementation of the FATCA Law, signed on the 2nd of Tammuz 5774 (30 June 2014);

"equity interest" – an interest in share capital, a right to profits and similar rights, and in respect of a financial institution that is a partnership – an interest in the capital of the partnership or a right to profits of the partnership; in a financial institution that is a trust, an equity interest is regarded as held by any person considered to be a settlor or beneficiary of the trust, in whole or in part, or any other individual who has effective control of the trust;

"insurance contract" – a contract under which the insurer undertakes to pay a sum of money upon the occurrence of the death of a person, an accident, illness, disability, loss of an asset or damage to an asset, or monetary liability arising from third-party liability, excluding an annuity contract;

"cash value insurance contract" – an insurance contract that grants a cash value, which is not an indemnity contract between two insurance companies, and for the purposes of the FATCA agreement – such an insurance contract that grants a cash value exceeding an amount in new shekels equivalent to USD 50,000, according to the exchange rate; for this purpose, "cash value" – the greater of the amounts under paragraphs (1) or (2), and excluding an amount payable under the insurance contract under paragraph (3)(a) to (c):

(1)the amount that a policy holder may receive upon the cancellation or termination of the insurance contract, calculated without taking into account early redemption fees or loans;
(2)the amount that the policy holder may borrow under the insurance contract or with reference to it;
(3)
(a)compensation for damage caused to a person by illness or accident, or another payment to indemnify or compensate for economic loss arising from the occurrence of the insured event;
(b)a refund of a premium paid under an insurance contract that is not a life insurance contract, as a result of the termination or cancellation of the insurance contract, a decrease in risk exposure during the insurance period or a recalculation of the premium due to correction of an error in the publication of a tariff, a classification error or a similar error; for the purposes of this sub-paragraph, "life insurance" – as its meaning in section 41 of the Insurance Contract Law, 5741-1981;
(c)in a group insurance contract – a profit-sharing payment based on underwriting profits in relation to the insurance contract or the group insured under the insurance contract;

"annuity contract" – a contract under which the issuer undertakes to make payments during a period determined, in whole or in part, by reference to the life expectancy of one or more individuals, including a contract considered under the law or practice in Israel as an annuity contract, under which the issuer undertakes to make payments during a fixed period;

"FATCA Law" – the law of the USA regarding compliance in tax matters with respect to foreign accounts – The Foreign Account Tax Compliance Act (sections 1471–1474 of the Internal Revenue Code);

"custodial account" – an account for the benefit of another person, in which a contract for the purpose of investment or a financial asset within its meaning under generally accepted accounting principles is held, excluding an insurance contract or an annuity contract;

"financial account" – an account held in a financial institution, including each of the following:

(1)a deposit account;
(2)a custodial account;
(3)for the purposes of an investment entity that is a financial institution solely by reason of being an investment entity – any equity interest or debt interest in that investment entity that is not regularly traded on a regulated securities market;
(4)for the purposes of a financial institution that is not an investment entity as referred to in paragraph (3) – any equity interest or debt interest in the financial institution that is not regularly traded on a regulated securities market, if both of the following conditions are met in respect of it:
(a)the value of the equity interest or the debt interest is determined, directly or indirectly, primarily by reference to assets from the income of which tax must be withheld at source in the USA;
(b)it can be demonstrated that the type of interest was established with the purpose of avoiding reporting under the FATCA agreement or an implementation agreement;
(5)a cash value insurance contract or an annuity contract, issued by or held in a financial institution; however, a contract that finances a pension benefit or disability benefit granted to an individual from an account that has been excluded from the definition of financial account in an agreement with the foreign state and in which all of the following conditions are met shall not be regarded as a financial account:
(a)it is non-transferable;
(b)it is not yield-dependent;
(c)it is for an immediate life annuity; for this purpose, "immediate life annuity" – an annuity for the life of one or more persons, provided that the annuity payments commence to be paid no later than one year after the date of the first deposit in the account and the annuity payments are equal and paid annually or at a higher frequency;

and all of this excluding an account as referred to in paragraphs (1) to (5) that has been excluded from the definition of financial account for the purposes of the FATCA agreement or an implementation agreement, as the case may be;

for the purposes of paragraphs (3) and (4), an equity interest or a debt interest shall be regarded as regularly traded on a regulated securities market if there is a significant volume of trade in it on an ongoing basis on a stock exchange recognised and supervised by a governmental authority in the state in which the market is located, and a significant annual value of shares is traded thereon; however, an equity interest or a debt interest in a financial institution shall not be regarded as regularly traded as aforesaid and shall be regarded as a financial account if the holder thereof, who is not a financial institution acting as an intermediary, is registered in the books of the financial institution, unless it was registered with the financial institution before the 3rd of Tammuz 5774 (1 July 2014);

"deposit account" – a savings account, a commercial account, a current account, a time deposit or an account evidenced by a certificate of deposit, a certificate of savings, a certificate of investment, a certificate of indebtedness, or another similar instrument held in a financial institution in the ordinary course of banking business or similar business, including a contract with an insurance company guaranteeing a return or another similar contract for the payment of interest;

"entity" – a body of persons or a legal arrangement;

"financial institution" – a depository institution, a custodial institution, an investment entity or a specified insurance company, as each of these is defined in paragraphs (1) to (4), unless the Minister of Finance, with the approval of the Finance Committee of the Knesset, has excluded it from this definition, and the Minister of Finance may exclude it as aforesaid for the purposes of the FATCA agreement or an implementation agreement; for this purpose –

(1)"depository institution" – an entity that accepts deposits from others in the course of its banking business or in the course of similar business, including a banking corporation, and the subsidiary within its meaning in section 88k of the Postal Law, 5746-1986, in its provision of financial services as defined in that law;
(2)"custodial institution" – an entity that holds financial assets for others and whose income from holding them and from related financial services is 20 per cent or more of its total income during the period from the date of its establishment or during the three-year period ending on 31 December or on the last day of its accounting period ending on another date, that preceded the year in which it is being examined whether it is such an entity, whichever period is shorter;
(3)"investment entity" – an entity that carries on one or more of the following on behalf of a customer, or an entity managed by an entity that so carries on:
(a)trading in money market instruments, including cheques, bills, deposit certificates and derivatives; foreign currency; exchange instruments; interest rate instruments and index instruments; transferable securities; trading in futures contracts in respect of commodities;
(b)individual or collective investment portfolio management;
(c)investment or other management of money on behalf of another;

including a corporation holding a portfolio manager licence as defined in section 1 of the Regulation of Investment Advice and Portfolio Management Law, 5755-1995, a provident fund and a managing company as defined in the Supervision of Provident Funds Law, a mutual fund and the fund manager, as their meaning in sections 3 and 4 of the Joint Investments Law, and a company holding a trading platform licence as defined in section 44l of the Securities Law;

(4)"specified insurance company" – any of the following, provided that it issues a cash value insurance contract or an annuity contract or is obligated to pay money in connection with such contracts:
(a)an insurance company, including a person who has received an Israeli insurer licence under section 15(a)(1) of the Supervision of Financial Services (Insurance) Law, 5741-1981;
(b)a company that holds a company as referred to in sub-paragraph (a);

"Israeli financial institution" – any of the following:

(1)a financial institution that is a resident of Israel, excluding a branch of such a financial institution located outside Israel and outside the area as defined in section 3a;
(2)a branch of a financial institution that is a non-resident, located in Israel;

"reporting Israeli financial institution" – an Israeli financial institution, excluding – for the purposes of the implementation of the FATCA agreement or an implementation agreement – such a financial institution that, pursuant to the provisions of that agreement, is not required to report on financial accounts;

"non-participating financial institution" – any of the following:

(1)a financial institution that does not comply with the provisions of the FATCA Law, is not exempt from the application of the FATCA Law and is not a resident of a state that has entered into an agreement with the USA for the implementation of the FATCA Law;
(2)a financial institution that is a resident of a state that has entered into an agreement with the USA for the implementation of the FATCA Law, but the tax authorities of the USA treat it as a non-participating financial institution;

"information" – including data, declarations and other documents;

"exchange rate" – the representative rate of the US dollar published by the Bank of Israel.

Identification of account holder and provision of particulars§

135c.
(a)A reporting Israeli financial institution shall require an account holder or a person requesting to become an account holder to provide it with the information necessary for the purpose of ascertaining that person's identity and state of tax residence or citizenship, and if that person is an entity – also information necessary for the purpose of classifying it and ascertaining the identity of a controlling shareholder therein and that person's state of tax residence or citizenship, and shall conduct, in respect of an account holder or a person requesting to become an account holder and in respect of a controlling shareholder in an entity, the checks necessary for the purpose of determining that person's place of tax residence or citizenship and classifying the entity as aforesaid, insofar as that information is required for the purposes of implementing the FATCA agreement, an implementation agreement or preparations towards such an agreement, as the case may be; the Minister of Finance shall prescribe provisions in respect of this subsection in accordance with the provisions of the FATCA agreement or an implementation agreement, as the case may be.
(b)An Israeli financial institution shall act as required for the purpose of being identified as such by the Assessing Officer and foreign tax authorities, all as the Minister of Finance shall prescribe by Regulations.
(c)A reporting Israeli financial institution shall transfer to the Assessing Officer information concerning an account holder and a controlling shareholder in an entity holding an account and concerning a financial account, which the Assessing Officer is to transfer to a tax authority in a foreign state, all as the Minister of Finance shall prescribe by Regulations.
(d)Regulations under subsections (a) to (c) shall be made in consultation with the Governor of the Bank of Israel, the Chairman of the Israel Securities Authority and the Minister of Justice, and with the approval of the Finance Committee of the Knesset.

Notice to customer regarding transfer of information to the Assessing Officer and from the Assessing Officer to a foreign tax authority§

135d.
(a)For the purposes of implementing the FATCA agreement or an implementation agreement, the Minister of Finance, with the approval of the Finance Committee of the Knesset, shall prescribe provisions regarding the giving of notice by a reporting Israeli financial institution to a person whom the financial institution has classified as a citizen or resident of a foreign state, to the effect that information concerning that person and concerning a financial account in that person's ownership or in the ownership of an entity under that person's control is expected to be transferred to the Assessing Officer for the purpose of its transfer by the Assessing Officer to the tax authority of that state in accordance with the provisions of the FATCA agreement or an implementation agreement, as the case may be.
(b)The notice shall include information on the options available to the recipient of the notice to change that person's classification as a citizen or resident as aforesaid in accordance with the provisions of the FATCA agreement or an implementation agreement.
(c)The notice shall be sent at least 30 days before the transfer of the information to the Assessing Officer pursuant to section 135c.
(d)Once every two years, a reporting Israeli financial institution shall send an additional notice to a person to whom a notice as referred to in subsection (a) was sent, regarding the transfer of information concerning that person to the Assessing Officer.

Provisions for the implementation of the FATCA agreement§

135e.

For the purposes of implementing the FATCA agreement, the Minister of Finance, in consultation with the Governor of the Bank of Israel and the Chairman of the Israel Securities Authority and with the approval of the Finance Committee of the Knesset, shall prescribe –

(1)circumstances and conditions upon the occurrence of which a reporting Israeli financial institution shall close a financial account opened with it after the 2nd of Tammuz 5774 (30 June 2014), in respect of which the financial institution was unable to obtain the information required by it to fulfil its obligation under section 135c(a), and also circumstances in which a financial account shall be regarded as closed;
(2)circumstances and conditions upon the occurrence of which a reporting Israeli financial institution must withhold amounts from a withholdable payment from a US source of income that it transfers to a non-participating financial institution;
(3)circumstances and conditions upon the occurrence of which a reporting Israeli financial institution shall provide prescribed information to a person who pays a withholdable payment from a US source of income to a non-participating financial institution;

for the purposes of paragraphs (2) and (3), "withholdable payment from a US source of income" – any payment of interest, dividend, rent, wages, salary, premium, annuity, compensation, remuneration, emolument and any other payment, fixed or variable, payable in any year or in any other period, originating in the USA, excluding a payment that is not a payment from which tax must be withheld at source under the law of the USA.

Provisions for the implementation of agreements – temporary provision§

135e1.
(a)Notwithstanding the provisions of sections 135c and 196, during the period from the 20th of Av 5778 (1 August 2018) until the date of commencement of the Law for the Regulation of the Provision of Deposit and Credit Services without Interest by Charitable Loan Institutions, 5779-2019 (in this section – the Charitable Loan Institutions Law), an association or a public benefit company whose business is the provision of interest-free credit to an individual or to another whose business is the provision of such credit shall be regarded as a public institution as defined in section 9(2) for the purposes of implementing an international agreement, an information exchange agreement, an implementation agreement or the FATCA agreement, if a certified public accountant's confirmation of the submission of an annual report to the Tax Authority pursuant to section 9(2)(b) has been provided to the reporting financial institution; for this purpose, "interest" – as defined in section 25a of the Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016.
(b)If the Minister of Finance has postponed the commencement of the Charitable Loan Institutions Law pursuant to section 109(c) of that Law, the period referred to in subsection (a) shall be extended accordingly.

Restriction on use of information§

135f.
(a)The Assessing Officer shall not use information received pursuant to section 135c(c), except for the purpose of transferring it to the tax authorities in foreign states pursuant to section 135g.

Power to implement agreements§

135g.

Notwithstanding the provisions of sections 231 and 234, the Assessing Officer or a person authorised by the Assessing Officer for that purpose shall transfer information to tax authorities in foreign states and shall act in all matters related thereto, as required in accordance with the FATCA agreement and an implementation agreement, and the provisions of section 214b shall apply.

Report to the Knesset – temporary provision§

135h.

During a period of four years from the date of commencement of the Income Tax Ordinance Amendment Law (No. 227), 5776-2016, the Chief Economist and Supervisor of State Revenue in the Ministry of Finance shall report to the Finance Committee of the Knesset, once a year, on the implementation of the provisions of that Law.

Power to require employer to submit a return in respect of employees§

136.
(a)Every employer is required, if so required by the Assessing Officer by notice, to prepare and submit within the time prescribed in the notice a return for a given year containing the names and places of residence of persons employed by the employer and the payments and allowances given to them in respect of their employment with the employer; the provisions of this Ordinance regarding failure to submit a return or particulars required by an Assessing Officer shall apply to such a return, provided that an employer shall not be penalised for the omission of the name and place of residence of an employee employed by that employer who is not employed in any other employment, if it appears to the Assessing Officer, after inquiry, that that employee has no chargeable income.
(b)If the employer is a body of persons, the manager or other principal officer shall be regarded as the employer for the purposes of this Chapter, and every director of the company, or a person employed in its management, shall be regarded as employed by it.

Power to require a return in respect of income received or paid to another§

137.

Where a person – regardless of the capacity in which that person acts – receives profits or income to which this Ordinance applies and which belong to a certain person, or pays profits or income as aforesaid to a certain person or to that person's order, the Assessing Officer may deliver to that person a notice requiring that person to submit, within the time prescribed therein, which shall not be less than thirty days after the date of its service, a return containing a true and correct disclosure of all such profits and income and the name and address of that certain person.

Power to require a return from an occupier of premises§

138.

The Assessing Officer may deliver to any person occupying a homestead, land or industrial building a notice in writing requiring that person to submit within a reasonable time a return containing the name and address of the owner of the homestead, land or industrial building, as well as a true and correct disclosure of the rent paid and any other consideration given therefor.

Power to require a return in respect of residents and tenants§

139.

The Assessing Officer may deliver to a person a notice in writing requiring that person to submit, within the time prescribed therein, which shall not be less than thirty days after the date of its service, a return containing the name of every resident or tenant residing in that person's house, hotel or institution on the date of the notice and who had been residing there throughout the three months preceding that date, apart from temporary absences.

Power to Require Official Information§

140.

Notwithstanding anything in any other law, the assessing officer may require any employee of a public body to supply any particular required for the purposes of this Ordinance that is within the knowledge or possession of that employee, but no employee as aforesaid may be compelled under this section to disclose particulars in respect of which the employee is bound to maintain confidentiality under the Statistics Ordinance, 1947, or under the Postal Law, 5746-1986, or under the Bank of Israel Law, 5770-2010; an employee who has been so required shall supply the particulars within 30 days from the date of the requirement or at such other time as is specified in the requirement;

For the purposes of this section, "public body" – the State, any body subject to audit by the State Comptroller, and any other body that the Minister of Finance, with the approval of the Finance Committee of the Knesset, has determined to be a public body.

Receipt of Information from the National Insurance Institute§

140a.
(a)Without prejudice to the provisions of section 140 and notwithstanding anything in any other law, the Director, or a person whom the Director has authorised for this purpose from among the employees of the Israel Tax Authority (in this section – the Authority), may receive from the National Insurance Institute (in this subsection – the Institute) information regarding payments or benefits paid by the Institute under any law that constitute income in the hands of the taxpayer, and the Director may also receive from the Institute a report that the Institute received pursuant to section 355(a1) of the National Insurance Law [Consolidated Version], 5755-1995, all provided that such information is required for the purpose of making an assessment or conducting an audit, and to the extent required.
(b)The Minister of Finance, with the consent of the Minister of Justice and the Minister of Welfare and Social Services and with the approval of the Finance Committee of the Knesset, may prescribe additional information beyond that stated in subsection (a) that the Director, or a person whom the Director has authorised for this purpose from among the employees of the Authority, shall be entitled to receive from the National Insurance Institute, provided that such information is required for the purpose of making an assessment or conducting an audit, and to the extent required.
(c)Information regarding payments or benefits as referred to in subsection (a) and information prescribed pursuant to the provisions of subsection (b) shall be transmitted to the Authority as an electronic message, as defined in the Electronic Signature Law, 5761-2001; however, the Director General of the National Insurance Institute may direct that certain items of information be transmitted to the Authority in another manner, if the Director General has found that there is an impediment to transmitting them as an electronic message as aforesaid.

Obligation to Give Notice of Agreement for Net Payment§

141.

Where a person has undertaken in an agreement to pay another employment income that shall not fall below a specified sum, after deduction of tax under section 164, both the payer and the recipient are required to give notice thereof to the Director within thirty days from the date of making the agreement, specifying therein the particulars of the agreement and any other particular relating thereto that the Director may require, and if the agreement was in writing – a copy thereof shall be attached to the notice.

Obligation of Money Changers to Report§

141a.
(a)A person who is required to hold a licence under the Regulated Financial Services Law (in this section – a money changer) shall report to the Director on every transaction carried out in an amount of NIS 50,000 or more, including the particulars of the transaction and the identification particulars of the party with whom the money changer contracted in order to carry it out, and if there is a beneficiary who is not the party with whom the money changer contracted – also the identification particulars of the beneficiary; and shall also report, no later than the 10th of the month, in each of the months of April, July, October and January, in respect of the first, second, third and fourth quarters of the tax year, respectively, whether or not a transaction subject to the reporting obligation was carried out as aforesaid (hereinafter – non-transaction report); for this purpose –

"Regulated Financial Services Law" – the Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016;

"transaction" – a financial asset service or the granting of credit, as defined in the Regulated Financial Services Law;

"beneficiary" – a person for whom or for whose benefit the transaction is carried out.

(b)Information detailed in a report pursuant to subsection (a) shall be stored in a database as defined in the Privacy Protection Law, 5741-1981 (in this section – the Privacy Protection Law), which is a dedicated database, separate from any other database (in this section – the database), for a period of seven years; at the end of that period the information shall be deleted.
(c)The database and the system for the collection and receipt of online reports thereto shall be designed in a manner that minimises the risk of harm to the privacy of the data subjects, having regard, as far as possible, to accepted technological alternatives, in consultation with the Head of the Privacy Protection Authority; in this section, "Head of the Privacy Protection Authority" – the Head of the Authority as defined in the Privacy Protection Law.
(d)The Director shall authorise, from among the employees of the Israel Tax Authority, database access authorised persons who shall be responsible for the management of the database, for the processing of information in the database and for the transfer of information from the database to those who are entitled to use it pursuant to subsection (e); an authorised person who has been so authorised (in this section – access authorised person) shall not perform any function other than that stated function.
(e)An access authorised person shall not process information and shall not transfer information from the database except in accordance with the provisions of this Law and to the extent required therefor; an access authorised person may transfer information from the database only to the entities and for the purposes set out below:
(1)to an employee of the Israel Tax Authority with investigative powers (in this section – a tax investigator), for the purpose of conducting criminal proceedings – if a tax investigator has formed a suspicion that one or more of the following offences has been committed:
(a)an offence under section 220;
(b)offences under section 98(g2) of the Land Taxation Law;
(c)offences under section 117(b) and (b1) of the Value Added Tax Law;
(2)to an assessing officer – for the purpose of an assessment as referred to in section 145, if the assessing officer has reasonable grounds to assume that income in an amount exceeding NIS 500,000 has not been reported;
(3)to the Director – for the purpose of tax determination and for the purpose of an assessment as referred to in sections 76 and 77 of the Value Added Tax Law (in this section – the VAT Director), as the case may be, if the VAT Director has reasonable grounds to assume that transactions in an amount exceeding NIS 500,000 have not been reported, or that input tax included in a tax invoice that was issued unlawfully, the amount stated therein exceeding the said amount, has been deducted;
(4)to the Director as defined in the Land Taxation Law – for the purpose of an assessment as referred to in section 78 of the Land Taxation Law (in this section – the Land Taxation Director), if the Land Taxation Director has reasonable grounds to assume that the declaration pursuant to that section is incorrect, and the deviation from one of the particulars in respect of which it was made is in an amount exceeding NIS 500,000;
(5)to an entity listed in paragraphs (1) to (4) – where all of the following conditions are met:
(a)the access authorised person has found that transactions were carried out that warrant further examination, in accordance with criteria set by the Director in procedures, with the consent of the Minister of Justice;
(b)the access authorised person has cross-referenced the information on the transactions as referred to in sub-paragraph (a) with other information concerning the person who carried out the transactions that is held by the Israel Tax Authority, as the Minister of Finance shall prescribe, with the consent of the Minister of Justice;
(c)the access authorised person has been satisfied that there is a suspicion that an offence has been committed, that income has not been reported, that transactions have not been reported, that input tax has been deducted, or that an incorrect declaration has been made as referred to in paragraphs (1) to (4).
(f)The transfer of information pursuant to subsection (e)(1) to (4) shall be made upon a reasoned request by a tax investigator, an assessing officer, the VAT Director or the Land Taxation Director, as the case may be.
(g)Information that has been transferred to a tax investigator, an assessing officer, the VAT Director or the Land Taxation Director pursuant to this section shall not be used except for the purposes set out in subsection (e).
(h)A tax investigator, an assessing officer, the VAT Director and the Land Taxation Director shall not transfer information that they have received pursuant to this section; however –
(1)if an assessing officer, the VAT Director or the Land Taxation Director has found that information received from the database gives rise to a suspicion that an offence under subsection (e)(1) has been committed, the officer or director may transfer it to a tax investigator for the purpose of conducting criminal proceedings;
(2)if a tax investigator has found that information received from the database gives rise to a suspicion of failure to report income, failure to report transactions, deduction of input tax or making an incorrect declaration as referred to in subsection (e)(2) to (4), the investigator may transfer it to an assessing officer, to the VAT Director or to the Land Taxation Director, for the purpose of an assessment as referred to in section 145, in section 77 of the Value Added Tax Law or in section 78 of the Land Taxation Law, or for the purpose of tax determination as referred to in section 76 of the Value Added Tax Law, as the case may be.
(i)A person to whom information has come pursuant to this section in the course of performing his or her duties or in the course of his or her work shall keep it confidential, shall not disclose it to another and shall not make any use of it except in accordance with the provisions of this section or pursuant to a court order.
(j)A person who discloses to another information that has come to the person pursuant to this section, or who makes use of it, contrary to the provisions of subsection (i), is liable to three years' imprisonment or a fine as referred to in section 61(a)(3) of the Penal Law, 5737-1977; a person who causes, through negligence, the disclosure of information to another, contrary to the provisions of subsection (i), by breaching a provision of the provisions prescribed for information security pursuant to this section, is liable to one year's imprisonment or a fine as referred to in section 61(a)(2) of the said Law.
(k)
(1)The Minister of Finance, with the consent of the Minister of Justice, may prescribe that a money changer who is required to submit a report pursuant to subsection (a) shall submit the report online in a manner the Minister shall direct, provided that the money changer reports to the Israel Tax Authority on his income online, and the Minister may prescribe that the obligation shall apply to particular money changers, in accordance with their business turnover;
(2)Where an obligation to submit an online report has been prescribed as referred to in paragraph (1), the Director may prescribe implementation instructions as to the manner of submitting the report, provided that instructions regarding the protection of the systems used for the collection and processing of information at the money changer's premises and for the transmission of the online report shall be prescribed in consultation with the Head of the Privacy Protection Authority; for the purposes of this paragraph, "information" – personal information as defined in the Privacy Protection Law;
(3)Where an obligation to submit an online report has been prescribed pursuant to this subsection, a person who has not submitted a report online shall be deemed, for the purposes of the provisions of this Ordinance, not to have submitted a report.
(l)The Minister of Finance, with the consent of the Minister of Justice and with the approval of the Constitution, Law and Justice Committee of the Knesset, shall prescribe provisions on the following matters:
(1)the dates for reporting pursuant to subsection (a), provided that the reporting obligation shall not exceed once per quarter;
(2)what are the particulars of the transaction and the identification particulars to be included in the report pursuant to subsection (a);
(3)cases in which several transactions carried out in proximity at the same money changer, between which there is a connection, shall be treated as a single transaction for the purpose of calculating the amount prescribed in subsection (a);
(4)rules for the submission of the report pursuant to subsection (a);
(5)the collection, retention and security of information pursuant to this section, in consultation with the Head of the Privacy Protection Authority;
(6)the determination of those authorised to receive information from an access authorised person and rules for the transfer of information pursuant to the provisions of subsections (e) and (h);
(7)what information held by the Israel Tax Authority an access authorised person may cross-reference with information on transactions warranting further examination pursuant to subsection (e)(5).
(m)The Director shall report in writing, every half year, to the Constitution, Law and Justice Committee of the Knesset on all of the following:
(1)the number of reports received in the database, by types of transactions detailed in subsection (a);
(2)the number of transfers of information from the database to entities entitled to receive information therefrom, classified as follows: tax investigator, assessing officer, VAT Director and Land Taxation Director;
(3)the use made of information transferred to a tax investigator according to the following classification, distinguishing between information transferred from an access authorised person at the request of the tax investigator, from an access authorised person based on the access authorised person's own suspicion, and from an assessing officer, the VAT Director or the Land Taxation Director:
(a)the proportion of information transfers actually used in the investigation only, and the proportion of information transfers that led to the filing of indictments, and the penalties imposed in proceedings as aforesaid that ended in conviction;
(b)the extent of the contribution of the use of the information to the advancement of the criminal proceedings and to the severity of the punishment, to the extent there was such a contribution;
(4)the use made of information transferred to an assessing officer, the VAT Director and the Land Taxation Director according to the following classification, distinguishing between information transferred to them from an access authorised person at their request, from an access authorised person based on the access authorised person's suspicion, and from a tax investigator:
(a)the proportion of information transfers actually used in assessments under section 145, under section 77 of the Value Added Tax Law and under section 78 of the Land Taxation Law, as the case may be, the number of assessments, the amount of the assessments, and the amounts of tax collected from those in respect of whom assessments as aforesaid were issued;
(b)the extent of the contribution of the use of the information to the amount of the assessment, to the extent there was such a contribution;
(5)the number of money changers on whom a monetary sanction was imposed pursuant to section 195b(b) and the amounts of the sanctions imposed on them.
(n)The Supervisor of Financial Service Providers appointed pursuant to the Regulated Financial Services Law shall report in writing, every half year, to the Constitution, Law and Justice Committee of the Knesset on the number of persons registered in the Financial Service Providers Register maintained pursuant to section 5a of that Law, at the beginning and at the end of that period.
(o)(Repealed)

Obligation to Report on a Senior Office Holder or Employee in a Financial Corporation Whose Salary Cost Exceeds the Payment Ceiling§

141b.
(a)A financial corporation shall report to the Director, at the time referred to in section 132 and on a form to be prescribed by the Director, on every senior office holder or employee whose salary cost paid to the senior office holder or employee by the financial corporation, by itself or together with related corporations, exceeds the payment ceiling; the financial corporation shall attach to the said report the manner of calculation of the salary cost or the total salary cost and the payment ceiling and shall specify in respect of each corporation the portion paid by it.
(b)Notwithstanding the provisions of subsection (a), if the financial corporation referred to in that subsection has a controlling corporation, the reporting obligation in respect of the total salary cost shall apply to the controlling corporation.
(c)A copy of the report pursuant to subsection (a) shall be transmitted to the corporations related to the financial corporation.
(d)In this section –

"total salary cost" – as its meaning in section 32(17)(b);

"payment ceiling" – as defined in section 32(17)(e);

"financial corporation" and "controlling corporation" – as defined in the Remuneration of Office Holders in Financial Corporations (Special Approval and Disallowance of Expenditure for Tax Purposes in Respect of Exceptional Remuneration) Law, 5776-2016.

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