Extensive Tax Benefits For New Immigrants In Israel

Author:Mr Ofer Rachmany
Profession:Udi Barzily Law Firm
 
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In contrary to the world "trend" to combat hidden bank accounts and tax-havens entities, a contradicting policy may be viewed in Israel, which recently amended its tax laws. Currently, Israel provides New Immigrants and Returning Residents with extreme tax benefits, including a 10-year tax exemption on foreign sourced income and gains, as well as no reporting requirements on such income or gains.

Background In recent years, and especially in 2009, the pressure of the developed countries on low tax jurisdictions has been accelerating. Hidden bank accounts and "sheltered" companies are intensively targeted by the OECD1 at the multilateral level, by each of its Member Countries and specifically by the United States (U.S.) through its Ministry of Justice and the Inland Revenue Service (IRS). The OECD Member Countries include most of the European Union Member States as well as other major economies e.g., Japan, the U.S., Australia and Korea.

The OECD has been closely monitoring the concentration of financial activities and funds in off-shore jurisdictions, as well as in low tax countries such as Austria, Luxemburg and Switzerland. There is a special interest in activities and assets of net wealth individuals and their links to highly favorable financial centers.

During the last year, both the OECD and the U.S. took several unconventional and extreme steps in order to minimize the world-wide tax evasion, as they observe it. These initiatives took the world's attention mainly in light of the highly aggressive steps of the IRS towards the Swiss financial giant UBS (and the precedence of disclosing hundreds of names of U.S. tax payers while thousands more may also be provided to the IRS).

Actually, Israel was also influenced by this global trend against tax-havens and tax avoidance in its early stages: in 2003 the Israeli tax system was shifted to a new tax base - the imposition of income tax on a worldwide basis. Additionally, Israeli has introduced Controlled Foreign Corporation (CFC) rules, worldwide Vocational Taxation provisions, extensive reporting requirements and a revolutionary trust law reform, all of which intend to significantly increase tax collection while combating tax evasion.

The OECD's Initiatives and Policies On September 1, 2009 the OECD has published another report regarding tax-havens (Overview of the OECD's work on Countering International Tax Evasion) that provides a global review of the tax evasion through low tax jurisdictions. According...

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