A One-Time Opportunity: Israel Tax Authority Voluntary Disclosure Procedure 2025 Unveiled

The Israel Tax Authority is offering taxpayers, businesses, individuals, and corporations that have not properly reported their income a valuable opportunity to regularize their tax affairs. The initiative is designed to encourage the correction of filings and past tax offenses, together with a commitment, coordinated with the State Attorney’s Office, that no criminal proceedings will be initiated against an applicant who submits a voluntary disclosure, subject to the conditions set out in the procedure. The Israel Tax Authority Voluntary Disclosure Procedure 2025 constitutes a temporary measure with limited validity. A thorough understanding is essential for anyone seeking to take advantage of this window. This article presents all material particulars, the preconditions, and the required steps, and provides a clear roadmap for proper conduct. We recognize the importance of accuracy and strict timelines, and our goal is to provide comprehensive guidance.

In Plain Terms: What Is Voluntary Disclosure

Voluntary disclosure is an admission of error and an effort to correct it. Instead of concealing or fearing severe consequences, the taxpayer approaches the Tax Authority and reports unreported income. With the guidance of a certified public accountant, the taxpayer navigates the process safely and efficiently. The taxpayer prevents escalation and, in exchange, the Tax Authority offers a “deal”: the taxpayer pays the additional tax liability instead of facing criminal prosecution. The process grants peace of mind and enables the taxpayer to move forward without fear.

Why Choose Voluntary Disclosure

Voluntary disclosure offers significant advantages:

• Avoidance of criminal proceedings - unlike a situation in which the Tax Authority discovers the noncompliance, the procedure allows you to avoid criminal consequences, provided the disclosure is truthful and complete and no prior investigation is pending in your case.

• Peace of mind - settling the liability brings substantial relief. It removes the risk of investigation or legal action and lets you focus on ongoing business.

• A fresh start - once the liability is regularized, you can file accurate returns and operate transparently without legacy concerns.

• Flexible payment terms - the Tax Authority may offer you convenient payment arrangements, including installment plans.

General Framework of the Voluntary Disclosure Temporary Measure

The Israel Tax Authority Voluntary Disclosure Procedure 2025 takes effect on its publication date, 25 August 2025, and remains in force until 31 August 2026. This temporary measure specifically addresses the tax offenses listed in Appendix A to the procedure. Immunity from criminal proceedings applies only to information provided within and in connection with the voluntary disclosure, and only with respect to offenses listed in the statutes referenced in Appendix A. The procedure does not apply to income derived from illegal activity, nor to offenses defined as administrative offenses under the Administrative Offenses Law, 1985. Understanding these boundaries is critical for a proper application.

Substantive Conditions for a Successful Application

To obtain approval under the Voluntary Disclosure Procedure 2025, the request must satisfy cumulative and exacting conditions aimed at ensuring good faith and integrity:

1. The disclosure must be truthful, complete, and submitted in good faith.

2. The applicant must meet key personal criteria: no conviction for tax offenses, no prior compromise payment in lieu of prosecution, and no previously approved voluntary disclosure request.

3. As of the submission date, no investigation or audit may have been initiated concerning the applicant. This includes inquiries by the Tax Authority or any other enforcement body, directly or indirectly, as well as in relation to the applicant’s spouse, controlled companies, or partners.

4. As of the submission date, the Tax Authority must not possess information relevant to the disclosure request, including information pertaining to the applicant’s spouse or controlled companies.

These conditions establish a clear baseline for eligibility.

Absence of Audit or Investigation as a Central Criterion

The requirement that no audit or investigation be pending before submission is a cornerstone of the 2025 procedure. The Tax Authority clarifies that this condition also includes the absence of any investigation or audit by the Israel Police concerning the applicant, the applicant’s spouse, or controlled companies. It covers any matter related to the disclosure, business activity, or any other income-producing activity. The Tax Authority may also deny a request if it has material information relevant to the disclosure, including information held by another governmental authority, the media, civil or criminal court files, or any other documentation, such as transcripts from judicial proceedings in Israel or abroad. A thorough background check before filing is therefore essential.

Filing the Request and Internal Workflow

The application under the Voluntary Disclosure Procedure 2025 is focused and structured. It must be submitted exclusively to the Senior Deputy Director for Investigations and Intelligence at the Tax Authority, referred to as the “competent authority,” who alone is authorized to approve it. The disclosure must be truthful and include all relevant information: applicant identities, details of unreported assets, the source of capital and unreported income, the tax years concerned, and the amount of omitted income. The request must also identify the source of income and the capital used to generate unreported income. If the omitted income constitutes a return on investment, the investment amount must be stated. Relevant documents should be attached, such as a probate order and bank account statements showing balances and transactions.

Formal Requirements and Review of Requests

In addition to substantive content, the 2025 procedure prescribes formalities. The request must include Appendix B to the procedure, fully completed and signed by the applicant. Each request must be signed by the applicant. If represented, a power of attorney must be attached, for example Appendix C. Requests are submitted to the competent authority only via the online form available in the personal area of the Tax Authority website. The competent authority may request additional documents or explanations. If the request is not approved, the competent authority will notify the applicant. If the request meets the conditions, the competent authority will notify the applicant of approval, subject to payment of the tax determined by the civil authority.

Civil Processing and Regularization of Tax

Once approved by the competent authority, the request is transferred to the civil authority for processing, for example a regional Real Estate Taxation office, VAT office, assessing officer, customs collector, and to the Undeclared Capital Disclosure Department in the Professional Division. The civil authority will process the matter through a track determined by the Undeclared Capital Disclosure Department: by accepting returns, accepting amended returns, or through an assessment procedure with the applicant. The civil authority may request further documents or explanations. If amended returns are required, the applicant must submit the relevant returns within 90 days from the decision date regarding the processing track. Where treatment proceeds via an assessment, the civil authority may reach a closing agreement with the applicant. If no agreement is reached, the civil authority will determine the tax according to best judgment under the Income Tax Ordinance or other tax statutes. The agreement or best-judgment assessment will be completed within one year of approval, subject to possible extensions by the competent authority. The next section addresses payment obligations and consequences.

Payment Obligation and Its Consequences

The applicant must pay the tax as determined by the civil authority or as self-assessed, by the deadline it sets. Payment includes principal, indexation, interest, and civil penalties under applicable law, including administrative sanctions, if imposed. The applicant must cooperate honestly and fully with all relevant Tax Authority units in all matters relating to the request. Upon payment of the civil tax as determined, no criminal investigation will be initiated against the applicant regarding the voluntary disclosure request under the 2025 procedure. This immunity is the keystone of the procedure and grants significant peace of mind. Full and timely compliance with all conditions and payments is imperative.

Limits on Criminal Immunity and Use of Information

Criminal immunity granted under the procedure applies only to information provided within the voluntary disclosure and to offenses listed in Appendix A. As noted, the procedure does not apply to income from illegal activity or to administrative offenses. If the request is not approved by the competent authority, the Tax Authority will not use the application materials in civil or criminal proceedings. However, the Tax Authority may use any information related to the request that it obtained through other means. Breach of the procedure’s requirements, such as providing false or incomplete information or failing to pay the tax, will result in cancellation of the voluntary disclosure and revocation of criminal immunity. In such circumstances, the Tax Authority may use the information provided as evidence in any civil and/or criminal proceeding. The importance of accuracy and truthfulness cannot be overstated.

Covered Tax Offenses

The Voluntary Disclosure Procedure applies specifically to the offenses listed in Appendix A and spans a wide range of tax laws. These include the Income Tax Ordinance, the Real Estate Taxation Law (Betterment and Purchase), the Value Added Tax Law, the Purchase Tax Law (Goods and Services), and the Customs Ordinance. The procedure also covers offenses under the Law to Reduce the Use of Cash, the Fuel Excise Law, the Property Tax and Compensation Fund Law, the Import and Export Ordinance, the Tobacco Ordinance, the Spirits Ordinance, and the Denatured Alcohol Ordinance. It also references the Prohibition on Money Laundering Law, 2000, where the predicate offense is one of those listed in Sections 1–12 of the procedure’s appendix. Understanding which offenses are included and which are not is critical to determining eligibility.

The Declaration Form and Required Information

Appendix B to the 2025 Voluntary Disclosure Procedure is a detailed declaration form that must be completed with precision. The form requires a factual description of the request, the relevant tax years, the principal tax amount, and the declared capital as of the submission date. Applicants must specify the cumulative amount of the omission, including unreported income, capital, and disallowed expenses. The form also requires disclosure of whether the assets or income derive from accounts or assets held abroad, and whether the total balance as of December 31, 2014 was below NIS 4,000,000.

Applicants must further disclose whether any new deposits or transfers were made into the relevant accounts during the ten years preceding the request. Additional questions relate to rental income and digital assets, and in such cases, supporting documentation must be attached. Every detail in the declaration carries substantial weight, and inaccurate completion may jeopardize the voluntary disclosure process.

Importance of Accuracy and Declarations in the Procedure

Through the declaration form, applicants affirm that the funds are not derived from illegal activity, except in cases where money laundering is linked to one of the predicate offenses listed in Appendix A. Applicants must declare that all details and documents submitted, or to be submitted, in the course of the process are complete and accurate.

It is critical to understand that providing false or incomplete information allows the Tax Authority to use the submitted materials as evidence in civil and/or criminal proceedings. The declarations extend to any additional information provided or agreements entered into with either the competent authority or the civil authority in the framework of the voluntary disclosure. Accuracy and integrity are therefore indispensable guiding principles throughout the procedure.

The Distinct Advantage of Our Firm in Navigating the 2025 Voluntary Disclosure Procedure

Mastering the complexities and stringent requirements of the Israel Tax Authority’s Voluntary Disclosure Procedure demands exceptional expertise, extensive experience, and rigorous legal and tax analysis. Our firm stands out in its ability to provide comprehensive and precise guidance throughout this process.

We bring a unique combination of up-to-date tax knowledge, including in-depth familiarity with international tax aspects, and years of practical experience in identifying critical nuances, tailoring case-specific strategies, and ensuring compliance with every procedural condition.

Our commitment is to deliver peace of mind and optimal tax solutions, enabling significant savings while maintaining full compliance with the law. Our professional team accompanies clients through every stage: from assessing eligibility for the procedure, gathering the necessary information and documents, drafting and submitting the application, to handling matters before the civil divisions of the Tax Authority.

We design the most effective path to regularize your tax affairs, minimize risks, and maximize the benefits of voluntary disclosure, all with uncompromising accuracy and expertise. Choosing our firm ensures a trusted and professional partner to guide you securely toward a compliant and stable future.