The Finance Committee of the Knesset today approved the CRS regulations, which stipulate that financial institutions will be required to transfer information on accounts of foreign residents for the purposes of tax enforcement.
After a one-year delay, the Income Tax Regulations (Implementation of a Uniform Standard for Reporting and Valuation of Financial Account Information- CRM) are the second and final stage. However, committee chairperson MK Moshe Gafni announced that he had submitted a revision, which will delay bringing the regulations to the Knesset plenum for final approval on their second and third reading. His step is aimed at ensuring that the Interest-Free Loan Societies (Jewish Gemach) bill passes its second and third readings in the Knesset.
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The CRS standard was developed by the Organization for Economic Co-operation (OECD) for the purpose of automatic exchange of information on an annual basis for mutual assistance in the enforcement of tax between countries.
Now, according to the law, information will be collected by the financial institutions about the financial accounts of residents of a foreign country – individuals and entities.
The information will be transferred to the competent authority in the country (in Israel – the tax authority) of residence of the account holder.
After the approval of the CRS regulations by the Knesset Finance Committee, financial institutions will be required to implement the CRS standard, as prescribed in the regulations.
The financial institutions that will be required to transfer information to the Tax Authority include entities dealing with receiving deposits, managing financial assets, holding financial assets for others and investing in them (such as banks, insurance companies, investment funds, etc.).
The information to be provided shall include details of the financial accounts and shall include the details of account holders, account balances and financial income received in the account. The information will be transferred via a computerized system developed by the Tax Authority.