The Israel Tax Authority will send out inspectors to locate unreported rental apartments, Tax Authority director general Yehuda Nasradishi today announced at the tax advisors conference in Eilat. He said that the real estate industry would be one of the Tax Authority's main targets in 2010, because of the industry's revival and the increase in sales of apartments for investment.
"We have the impression that taxes have not been paid on all the transactions," he said.
Nasradishi said that the Tax Authority intended to locate apartment owners who have not reported their rental income by cross-checking real estate data at local authorities, field inspectors, and intelligence.
Commenting on buyers groups and the committee that the Tax Authority has set up to examine them, Nasradishi said that there was an impression that buyers groups were not paying VAT, both when buying land from private parties, rather than the contractor making the deal, and on the savings in construction costs.
Commenting at length on the new tax breaks for new immigrants and returning residents, Nasradishi said, "The reforms for new immigrants is one of the finest and best reforms made here. It's a reform that doesn’t cost the government a shekel."
Nasradishi noted that reform stemmed the slide in immigration: whereas there were 25% fewer immigrants in 2007 compared with 2006, there were 4% fewer immigrants in 2009 compared with 2008. He said that immigration figures for January-August indicated a 19% increase in immigrants from the US, a 42% increase in immigrants from the UK, and a 10% increase in immigrants from Western countries. "These people were residing in these countries and were afraid to come here because of the terror of the tax regime," he said.
Nasradishi said that the one-year adaptation option greatly encouraged immigration. "I bring him here, and he settles here. I tell him, 'Travel the country; you're not yet a resident. You like it, stay. You don’t like it, go back; we don’t want anything from you. Previously, a new immigrant arrived, and the first person he encountered was the taxman, who opened a file on him and demanded pre-tax payments 50 days later. What's so bad in these people coming here? They buy apartments, even apartments for investment, they consume, they contribute to economic growth.
"Either way, that tycoon settles here, and seeks investments. These are people who can't sit quietly, so we enacted the measure."
Commenting on deliberations to extend the ten-year tax exemption by an additional ten years, Nasradishi said that any extension would be conditional on investing. "The exemption period will be subject to where you invest, how much you invest, and we'll have an additional exemption period, including changes in thhe reporting method."
Published by Globes [online], Israel business news - www.globes-online.com - on October 19, 2009
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