Four Arrested as Israel Cracks Down on Unreported Web Revenue

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By Matthew Kalman

The Israel Tax Authority has made a series of arrests as part of a crackdown on unreported income from online sales to Google, Ebay, and other internet companies.

The authority released a statement Aug. 2 following its fourth arrest in a month. According to the Tax Authority, during interrogation, a Tel Aviv man “admitted that he had produced an unreported income of 1,700,000 shekels ($472,698) from the sale of advertising space to Google between the years 2009-2014,” the authority said in a statement on Aug. 2.

The investigation of the “disappearance of revenues in the electronic commerce arena” and subsequent arrests were part of a collaborative effort with the Tel Aviv Investigations Appraiser, the Computerized Audit Department and the Intelligence Department of the Israel Tax Authority

In a July 17 statement, the tax authority said that during “an investigation into the concealment of revenue in the electronic commerce arena,” the ITA “has managed to map a list of Israelis who generate revenue from the Internet without reporting to the tax authorities.”

Among them, a resident of Tel Sheva near Beersheba was arrested and released on bail on suspicion of failing to declare advertising sales of 3 million shekels between 2010 and 2015 on a children’s online gaming website he operates. The suspect’s son and daughter-in-law were also questioned by investigators for their possible involvement.

Another suspect from Rishon Letzion allegedly sold coins on Ebay Inc. to the value of 800,000 shekels without declaring the income to the tax authorities. “The information gathered in the investigation revealed that the suspect maintained a profile on EBAY, in which he engaged in extensive activity of selling coins and ancient banknotes to collectors around the world. In a search of his home, documents and computer materials were seized and the suspect was brought in for questioning,” the tax authority said in the July 17 statement.

A suspect from Lod admitted concealing 700,000 shekels in revenue from 2012 to 2015 from Alphabet Inc.'s Google adverts on 10 websites he operates that deal with real estate and television series. “The activity continued in 2016, but he can not quantify the amount he received during this period,” the tax authority said in a statement on July 20.

All four suspects were arrested and released on bail by order of the Tel Aviv Magistrates Court, the authority said.

To contact the reporter on this story: Matthew Kalman in Jerusalem at matthewkalman@gmail.com

To contact the editor responsible for this story: Penny Sukhraj in London at psukhraj@bna.com

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