The Customs Authority may reopen a tax appraisal within five years in case of private importing of a car

July 28, 2019
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A person made a personal import from Germany of a Mercedes S350 L car and stated to the customs authorities, under the import license, that he purchased the vehicle in Germany at a certain price and even attached a tax invoice to prove the amount. After a year, as part of an investigation by the Israeli Customs Authority, the German Customs Authority presented an invoice used to export the vehicle from Germany, with an amount that is almost twice the amount declared in Israel. The Israeli Tax Authority demanded payment of tax, interest, linkage and fine of about ILS 200,000.
The Court held that the tax authority’s decision was reasonable. The Customs Ordinance allows the Tax Authority to reopen a tax demand within five years of the payment and transfers the burden of proof that the correct tax was paid on the assessee. An authority’s decision will be deemed reasonable if the authority has collected reasonably relevant data, the data seems reasonable and they support the decision reasonably. Here, the Tax Authority received documents from Germany that seem reasonable and contradictory to the information presented at the time of payment of the tax and even question the reliability of the documents originally presented and on which the tax assessment was based. Thus, the decision of the Tax Authority to impose tax and fines is reasonable.