Rosh HaAyin accountant suspected of omitting NIS 60 million in share income

An accountant from Rosh HaAyin, a city in central Israel, has been arrested on suspicion that he left roughly 60 million new Israeli shekels (NIS) in share sale proceeds out of a client's personal tax report, according to a statement from the Israel Tax Authority. The authority named him as Shlomo Tzedekiah. He appeared before the Magistrate's Court in Rishon LeZion and was released under restrictive conditions.

Investigators suspect that the omission meant about NIS 1.8 million in additional tax went unpaid. The authority said the client was a substantial shareholder in a company working in innovative technologies and sold his shares to a U.S. company. Tzedekiah is suspected of failing to declare that income even though, the statement says, he accompanied the deal on the client's behalf and prepared both the client's annual tax report and the capital gains filings connected to the sale. The investigation is continuing, and no charges have been announced.

Who is investigating

The Israel Tax Authority is the government body responsible for collecting income tax and enforcing tax law. According to the statement, the case was handled by its Central District Tax Investigations Office, a criminal enforcement unit, rather than through a routine civil audit. The authority said investigators carried out searches, seized evidence, questioned the suspect and took testimony from others involved in the matter.

The suspicion first surfaced through computerised data analysis by the Intelligence Division of the authority's Tax Investigations Department. That analysis, the authority said, showed that the client received cumulative proceeds of about NIS 60 million from the share sale over 2023 and 2024.

How the tax was supposed to work

The case turns on the difference between tax withheld at source and the full tax a person owes for the year. According to the authority, the money reached the client through a trustee who held the shares. The trustee withheld tax at a rate of 30% before passing on the funds, and told the client in writing that this withholding was only an advance payment toward his tax bill.

On top of that, Israeli law imposes an additional 3% tax on taxable income above a threshold set in the Income Tax Ordinance, the country's main income tax statute. This surcharge is not collected automatically by the trustee. It has to be declared and paid by the taxpayer through a personal report. Because the share income was missing from the client's report, investigators suspect the surcharge was never assessed, which is where the figure of about NIS 1.8 million comes from.

The authority's wider message

The statement used the case to remind the public that the additional tax also applies to one off income. The authority listed share sales, the exercise of employee stock options, lottery and gambling winnings and prize related activity among the kinds of income that can push a person above the threshold in a given tax year. When that happens, the 3% surcharge applies to the part of income above the threshold.

The authority also noted a further change: beginning in 2025, an extra 2% tax applies to taxable income from capital sources above the threshold, again charged only on the amount exceeding it. It stressed that having tax withheld at source does not release a taxpayer from the duty to report income and pay any additional tax owed.

For readers outside Israel, the reminder is relevant to anyone who earns income in the country from the sale of shares or stock options, including employees of technology companies whose holdings are bought by foreign firms, since withholding by a trustee or employer may not settle the full liability.

What an arrest and release means here

In Israel, a suspect who is arrested in a criminal investigation is typically brought before a Magistrate's Court, the lowest tier of the court system, which decides whether to extend detention or to release the person, often with conditions. Being released under restrictive conditions does not indicate guilt or innocence. It reflects a decision that the investigation can proceed without the suspect remaining in custody. A decision on whether to file an indictment usually comes later.

What the reports do not say

This account rests on a single source, the Tax Authority's own statement, and no independent reporting was available. The statement does not name the client, the technology company whose shares were sold or the U.S. company that bought them. It does not say what the restrictive conditions are, whether Tzedekiah has a lawyer or has responded to the suspicions, or whether the client is also under investigation. It does not explain what investigators believe motivated the omission, and it does not say whether the unpaid tax has since been paid. No timeline for a decision on charges was given.