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Israeli Court Upholds FATCA Law

by Lorys Charalambous,, Cyprus

19 September 2016

The Supreme Court of Israel has dismissed calls for a block on the Israeli Government transferring personal financial data to the US Internal Revenue Service under the Foreign Account Tax Compliance Act.

The petition calling for an injunction on information exchanges under FATCA was filed on August 8 by Republicans Overseas Israel and accepted by the court on August 31, just one day before FATCA exchanges between Israel and the US were due to begin.

Under the terms of the Model 1 IGA between Israel and the US, Israeli FFIs are required to report information on US account holders to the Israel Tax Authority, who will then automatically exchange the information with the US Treasury.

The petitioners argued that the law passed by the Israeli parliament on August 1 to allow these information exchanges to take place is an invasion of privacy and violates Israel's constitution. However, at the second hearing, Justice Hanan Meltzer dismissed the case, and suggested that the state's need to fight crime was greater than the need to protect individual privacy.

"In the modern world the right to privacy is very limited. The alternative to privacy is criminal acts of every kind. This is nothing new, except for the fact that it is regulated now under law and other mechanisms," Justice Meltzer said at the September 12 hearing.

According to Republicans Overseas Israel, the court criticized the Government "for failing adequately to protect the procedural rights of account holders," and did not award costs against the petitioners "even though we technically 'lost.'"

However, the pressure group said "the attitude of the justices was basically in the modern world the individual has no meaningful right of privacy."

"We shall return to fight for individual liberty soon," it added.

TAGS: court | Foreign Account Tax Compliance Act (FATCA) | FATCA | law | Israel | Compliance | Tax

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