Dr. Avi Nov, Adv.
The Israeli Tax Authority is leading a proposals that would require an Israeli new residents and Toshav Hozer Vatik to disclose their non Israeli source income and gains derived in their first 10 years in Israel.
Toshav Hozer Vatik
Under current Israeli tax law, a new residents and Toshav Hozer Vatik are exempt from any Israeli tax liability on their non Israeli source income and gains derived in their first 10 years in Israel. In addition, a new residents and Toshav Hozer Vatik do not need to disclose their non Israeli source income and gains derived in their first 10 years in Israel. The Israeli Tax Authority proposal is intended to deal with criticism from an OECD report, as discussed below.
The OECD report
The Global Forum on Transparency and Exchange of Information for Tax Purposes has released recently peer review reports assessing the tax systems of 13 jurisdictions, including Israel, for information exchange.
According to the report, the legal and regulatory framework in Israel generally ensures that ownership, accounting and banking information is available for all relevant entities and arrangements. However, in a limited number of cases, where a company has issued bearer shares, the owners of these shares may not be identifiable.
The Israeli Tax Authority has broad access powers to obtain requested information for exchange of information purposes under Tax Treaties, including from banks. However, ownership and accounting information may not be available and accessible in respect of certain trusts and new immigrants or returning veterans.
Israel has a considerable network of Tax Treaties that provide for exchange of information in tax matters. Nevertheless, the Israeli competent authority does not have access powers to give effect to agreements which cover only exchange of information (as distinct from double taxation).
Israel’s response to the findings of this report as well as the practical implementation of the international standard will be considered in the Phase 2 review, which is scheduled to commence in the second half of 2013.
Dr. Avi Nov Law Offices, Israeli & international tax law
*This article is intended for informative purposes only and is in no way to be construed as tax advice or a legal opinion