Finance Ministry Seeks Penalties for FATCA Violators

YERUSHALAYIM (Hamodia Staff) -

Israel’s Finance Ministry is seeking legislation for criminal prosecution of financial institutions and their employees who fail to comply with the U.S. Foreign Account Tax Compliance Act, Globes reports.

The ministry has drafted an amendment to the Income Tax Code to implement the tax information sharing agreement with the U.S. that would impose fines and up to seven years imprisonment on violators, sources said.

Banks, insurance companies and investment houses that do not supply information about their American customers will be vulnerable to legal action.

Some legal experts believe such measures would go too far, however.

“The bill far exceeds the FATCA rules, and in practice requires Israeli banks to gather information about all their foreign resident customers with accounts at a bank in Israel,” Gideon Bar-Zakkai, former Tax Authority deputy general for legislation told Globes.

“The way the bill is written now in effect proposes not just giving authority to the seeker of information, but apparently sets sweeping and binding provisions for gathering and delivery of information, against harsh sanctions,” he adds, and warns, “Economically, Israel is liable to be hit hard by this measure, because we rely on Jewish capital from the world being invested here, and it might be withdrawn.”