All countries in the world need money to finance their activities and services they provide to the citizens. A large part of each country’s budged is based on taxes paid by the citizens. Many resources are invested in optimal billing and collection, as well as in prevention of tax evasion. Body responsible for tax collection is the Ministry of Finance. In 2004, the Israel Tax Authority was established and it serves as the executive body responsible for collecting taxes from the citizens. Each operation conducted by an Israeli citizen, even if carried out abroad, is taxable in Israel.
Those engaged in taxable goods must register as an authorized dealer for tax purposes and report sales via a periodic report at the local Purchase Tax Department. Periodic report, along with the payment, shall be submitted via a bank, once a month. There are various reports for those engaged in sales of goods that should be paid twice a month, such as cigarette manufacturing and sale. Taxation billing is carried out on the day the goods are delivered to the buyer in accordance with Section 5 of the Law.
Penalty for purchase tax offenses
According to the tests conducted by the Tax Authority in the last year, there are many manufacturers, who produce goods, to which the purchase tax applies, for example alcoholic beverages and tobacco products, while these manufacturers are not registered for purchase tax purposes. These people do not report their products as required by the purchase tax provisions and do not pay the tax as they should. Such dealers are exposed to criminal proceedings due to their debt.
In case you have committed a purchase tax offense, it is recommended to convert the criminal proceeding into payment to the state. This payment is called a ransom. Payment of ransom involves a significant relief and therefore, it is preferable to imprisonment, infamy and fine that will be much higher than the ransom. You will be able to save a significant amount of money and valuable time in comparison to criminal proceedings.
How is the ransom calculated?
According to the order of the Ministry of Finance and Income Tax, criminal charges can be converted into payment of ransom, which shall not exceed twice the highest fine that can be imposed on purchase tax offense (Section 25 of the Purchase Tax Law). This is the maximum amount that can be determined for a ransom, although, on the other hand, a lower threshold has not been set yet. In some cases, the ransom is set at 10% of the purchase tax amount that was not paid. It should be noted that ransom amount largely depends on creditors’ cooperation, or a recommendation of the investigation unit and prosecution.
Ransom proceeding is an expedited procedure that serves as an alternative to criminal proceedings against the person accused of purchase tax offenses. When a legal debate is conducted, the prosecution tries to prove the charges, such as the purchase tax offenses, while the defendant tries to prove his position. Following the legal proceedings, the court publishes the verdict that the defendant is expected to receive severe punishment. This can be avoided by being represented by a criminal attorney, who specializes in tax offenses. The attorney will request to pay the ransom instead of the punishment imposed by the court.
Ronen Oren & Co. Law Office represent clients accused of tax offenses. The firm has an extensive experience and impeccable reputation gained through many years of representing tax offenders. Ronen Oren & Co. Law Firm have saved millions of NIS for their clients. Professional knowledge and proficiency in the field allows the firm to discover the expected amount of payment in advance and do everything possible to defend the client and achieve positive results.