As it is well known, in the framework of the 60^th anniversary of the State of Israel, amendment number 168 was added to the Israeli Tax Ordinance (“Immigrants Law“), in force as of 2007. The Immigrants Law is aimed to a special group of individuals (“qualified Individuals“) – new immigrants and “old returning residents” (those who returned to Israel after they had spent at least 10 years abroad) – who have been granted substantial tax reliefs, primary a tax exemption upon foreign income for a period of 10 years from the day of arrival or the day of returning to Israel.
In additional, the Immigrants Law also granted an exemption from reporting the foreign income and the ownership of assets outside of Israel to the tax authorities, for a period of 10 years from the day of arrival to Israel (“Reporting Exemption“).

Under the current legislation procedures regarding the Israel budget for the years 2013 and 2014, it is suggested to cancel the reporting exemption.

At the beginning of the legislative process, it was suggested to cancel the reporting exemption with respect to foreign income derived from the beginning of the year 2013 and forward, even if the individual immigrated or returned to Israel before 2013. As a result of responses and to petitions from some professional chambers and accountants and law offices to the suggested legislation, the legislature changed its position regarding the implementation of the suggested legislation. In the draft law published on June 11^th, 2013 (“the Draft Law“), it was recommended that the Reporting Exemption will no longer apply to qualified Individuals returning or immigrating to Israel on August 1^st, 2013, and forward (the expected day of entry into force of the Draft Law). According to the Draft Law, the Reporting Exemption will persist for qualified Individuals returning or immigrating to Israel before August 1^st, 2013.

We do not know what will be included in the final version of the Law, but in light of the legislature’s intentions in the published Draft Law, and in case the final version will not be different form the current published draft, it is recommended for those who wish to immigrate or return to Israel in the near future, to precede their plans and to shift their vital interests to Israel (with all that it entails), and to execute it till July 31^st, 2013. In that case, such person will be exempt from reporting his foreign income and its ownership of assets outside of Israel for a period of 10 years from the day of arrival or returning to Israel.

Our office has a vast experience in treating tax matters relating to new immigrants and returning residents. For further information, please contact Mr. Hagi Elmekiesse, CPA (ADV) or Mr. Gadi Alimi, CPA (ADV) or Mr. Eyal Sando, CPA (L.L.B) from our office.