Photo Credit: Salome Worch

Israel’s Finance Ministry has agreed to implement sections of the US Foreign Account Tax Compliance Act. The deal will require Israeli banks and financial institutions to report on income held by US citizens living in Israel to the Internal Revenue Service.

IRS officials said Israeli banks who refuse to report their customers to the IRS would face a 30 percent withholding on money transfers originating in the United States.

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The agreement is relevant to US citizens, permanent residents, and to their businesses.

Reporting is scheduled to begin on July 1. The Bank of Israel has instructed Israeli banks to enact sanctions, including cessation of services, against customers who refuse to authorise the transfer of information to the IRS.

 

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