By next year, the US Internal Revenue Service will require all Israeli businesses to declare whether any shareholders are US citizens.
The US Foreign Account Compliance Act (FATCA) regulations are being more broadly applied by Israeli banks. Now that banks in Israel have completed signing up private customers on declarations that their accounts have been reported to the US Internal Revenue Service (IRS), they are turning their attention to business customers.
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However, in the case of business customers, the instructions are even broader and apply to those who are not American. As of January 1 2015, Israeli banks are asking every new business customer to declare whether they are incorporated in the US and whether any of the company’s shareholders have US citizenship.
The forms to be filled are long and complicated and only available in English with no Hebrew version obtainable.
Zysman, Aharoni, Gayer & Co. Partner and the head of the law firm’s Tax and Money Laundering Prohibition Department Adv. Boaz Feinberg said, “Even if a company has no connection to the US, it must sign on the forms, which are complicated and without professional help, it is difficult to understand and sign them. And without signing them, it’s not possible to open an account.”
Israeli banking representative say that in the next phase, all business customers holding accounts will be required to sign the FATCA forms declaring about any connection to the US, and not just new customers. This phase should begin in June 2016.
The FATCA rules for business customers are even more stringent than those for private customers. In the private customers sector, the banks are only required to gather declarations from US citizens. In contrast, all the business customers are required to make the declarations and not just those registered in the US.
The reason is that the IRS is concerned that US customers will open a company in Israel in order to conceal capital. For this reason, Israeli companies will have to declare whether they have any US shareholders.
Published by Globes [online], Israel business news – www.globes-online.com