From January of next year, new immigrants and Israelis who qualify for benefits as returning expatriates will have to report on their assets and income abroad, if a proposed change to the law comes into force. It will only apply to people arriving in the country from January 2016 and onwards.
- How Israel Became a Tax Shelter for Wealthy Foreign Jews
- Israel Fights Against Becoming Tax Haven for Diaspora Jews
- How an Israeli Bank Stiffed Washington
The reporting requirement, from which they are currently exempt for the first 10 years after their arrival, is contained in a proposed provision of the Economic Arrangements Bill, which still requires approval by the Knesset.
Reporting will not deprive them of existing tax exemptions, which currently apply to income of all kinds, including wages, business income, interest, dividends and royalties, as well as capital gains from the sale of assets abroad.
New immigrants to Israel and returning expatriates are entitled to a package of financial benefits. The basic benefits are currently based on provisions of a reform plan from 2008, which was designed to attract more immigrants and Israeli citizens who had left the country and remained abroad continuously for at least 10 years.
In the seven years since the reform plan was adopted, there have been several attempts to change the reporting exemption, the last of which came in 2013. The current proposal is expected to be on the agenda of a special ministerial committee dealing with economic plans for this year and next. The meeting is scheduled for tomorrow.
The reporting requirement, if enacted, would apply in two stages. The first would extend from the date of arrival to the end of the following tax year, during which reporting would be at the request of the Israeli Tax Authority pursuant to an international agreement. After that period, all new immigrants and returning Israelis would be required to submit a report of their assets and income abroad without being asked.
Avi Nov, a lawyer specializing in international taxation who has a number of new immigrant and returning Israeli clients, said he is aware of a number of people who might reconsider their plans to move to Israel if the law passes On the other hand, there are others who are now considering moving up their arrival date to this year, so as not to be subject to the change, if passed.
The proposal is still be subject to change before the Economic Arrangements Bill is presented to the Knesset for its approval on August 31. The Knesset will hold the first of three votes required for final passage of the legislation on September 2.