The Israel Tax Authority is again attempting to cancel the exemption from reporting on foreign income and assets for new immigrants and Israeli residents returning from an extended stay abroad as part of the recommendations of the Committee on Amendments to International Taxation.
The Committee on Amendments to International Taxation today presented its recommendations to Israel Tax Authority head Eran Yaacov. The Committee is headed by Ronald Am-Shalem, VP for professional affairs in the Israel Tax Authority, on which all the relevant professional bodies, the Israel Bar Association, the Institute of Certified Public Accountants in Israel, and the Israel Tax Advisers Association, were represented.
In the Tax Authority's announcement about the recommendations of the Amendments Committee said, "More than a decade has passed since Amendment 168 came into effect and the Committee examined if the amendment to the Law has realized its aim and if there is still room for continuing to grant relaxations to Israeli citizens in their first years and veteran Israeli returning residents in its original format or if there is room for changing and revising it on the basis of experience gained, criticism of Israel because of this issue and to adapt it to the present."
The Committee is recommending cancelling the exemption on reporting for new immigrants and returning residents. The only opposition to the cancellation comes from the Israel Bar Association which thinks that it will be too much of a bureaucratic imposition on new immigrants and returning residents with no economic benefits as this would be a report on income exempt from tax.
The exemption is sometimes called 'Milchan's Law' after Israeli businessman Arnon Milchan who returned to Israel from the US. There have been so far unsubstantiated allegations that former Prime Minister Benjamin Netanyahu pushed to have the exemption extended in 2018 with Milchan in mind. Milchan is a prosecution witness in Case 1000 against Netanyahu, which revolves around this extension.
The Law to exempt new immigrants and returning residents to report on overseas income and assets was passed in 2008 to encourage the influx of money into Israel. The Law had its effect and among those who returned home between 2008 and 2010 were Milchan, Sammy Ofer and Shay Agassi, among others. But the Law has been severely criticized for its unequal treatment of overseas tycoons vis-a-vis Israeli citizens, and claims that it encourages money laundering.
Meanwhile there are new heads at the Ministry of Finance and Israel Tax Authority who do not understand the logic behind the Law and want to cancel it. Yaacov's predecessor Moshe Asher, backed by Ministers of Finance Yair Lapid (2013-14) and Moshe Kahlon (2015-20) unsuccessfully tried to cancel the exemption because of open and covert opposition from other government ministers, even though the exemption has faced international opposition for making Israel a tax haven.
Now the Israel Tax Authority is hoping to cancel the exemption as part of the amendments to international taxation.
Presumption of Innocence: Former Prime Minister Benjamin Netanyahu denies the charges brought against him and has not been convicted of any offence and so is entitled to the presumption of innocence.
Published by Globes, Israel business news - en.globes.co.il - on November 21, 2021.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.