Tax Man to Target Diamond Business

Armed with new and improved powers of investigation and enforcement, the Tax Authority is set to aggressively go after tax cheats beginning on January 1st, officials said over the weekend. And according to Authority chairman Moshe Asher, one of the main targets of the Authority will be diamond merchants.

The new enforcement effort comes after urging by the Bank of Israel for the Authority to more actively engage in the fight against money laundering, in line with Israel’s commitments to the U.S. and international organizations. It has long been felt by the Authority that diamond dealers are among the biggest offenders in this area, because of the traditional tight-lipped and “unofficial” manner that diamond deals have traditionally been conducted in. A report in Maariv said that the Authority was also putting pressure on banks, which have begun demanding paperwork for the sources of deposits from customers who are in the diamond business.

The Authority has made it known in the diamond-dealer community that it will accept voluntary disclosure of income and assets, with no penalties and no questions asked. After that, it said, it would act with the full force of the law against offenders.

However, it was unclear if the Authority could make good on its threats, at least in the near term, due to ongoing sanctions by workers. Authority employees have been without a contract for months, and representatives of the workers said that management was not in a hurry to sign one, in order to extract concessions from workers. In response, workers have been engaging in slowdowns, and the number of outstanding cases has jumped.