Tax Benefits to Encourage More Immigration to Israel

Published: May 4th 2010
in News » Israel

Tax benefits
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Israel's Maariv newspaper has reported on a new initiative being formulated by the Israeli Tax Authority that will see the framework for tax exemptions granted to new immigrants and returning residents expanded. Those eligible will receive a tax exemption for investments in the country over 20 years. Maariv reporter Yehuda Sharoni said that the move is intended to encourage the growth of the economy, and give preference to Israelis over foreign investors. According to the recommendations, new immigrants and returning residents will be exempt from investments in industrial plants and new business ventures formed in Israel.


Maarivalso reported that the exemption for immigrants and returning residents according to the new proposal will be based on several criteria. For example, if an immigrant initiates an investment in a new factory or project that increases employment, or if he invests in high-tech, he would enjoy a tax exemption on the receipt of dividends, interest or capital gains from the new initiative during the entire period of investment and up to 20 years afterwards. However, the plant or its employees would not be exempt from tax, and the assumption is that they will increase state revenue.


The Ministry of Immigrant Absorption has provided in recent years significant tax breaks to those who return to Israel, in order to increase the scope of immigration and remove significant barriers that hinder the return to Israel of many Israelis. The ministry, in cooperation with the Tax Authority formulated a tax reform. An Israeli citizen who left Israel and lived abroad for ten consecutive years, is considered for income tax purposes as a "veteran returning resident", and can enjoy the benefits of a new immigrant.


Israel's Tax Authority website lists the exemptions returning Israelis enjoy, among which are the following: an exemption from taxation and reporting for a period of ten years on assets and income originating outside of Israel, and will be awarded on all types of income, from income from interest and dividends abroad, rental income, income from additional businesses, and capital gains from sales of assets outside of Israel.


Recently a number of international businessmen returned to live in Israel, most of whom decided to continue to invest abroad rather than in Israel. The new initiative was born as a possible way of taking advantage of their return to Israel and giving them an incentive to invest in Israel again. The Tax Authority hopes that by introducing new exemptions, these businessmen would be willing to transfer money to Israel in order to make new investments.


The recommendations are likely to receive criticism from local residents, whose tax benefits are much more limited and might feel left out. For this reason the recommendations are slated to undergo thorough examinations which will include examinations by legal experts who will provide their opinions on the matter.

Related articles: (tax benefits, immigration, ministry of immigration, return to Israel, tax authority)
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