New initiative grants lots of benefits to new immigrants
Finance, immigrant absorption ministries roll out significant benefits package for new immigrants, returning citizens ahead of 60th anniversary
Finance Minister Roni Bar-On approved a tax relief and benefits package for new immigrants and returning citizens on Thursday as part of Israel's 60th anniversary celebrations. Among other things, the meaure will entitle Israelis who lived abroad for five years – as opposed to 10 – to be recognized as returning citizens.
Now, Israelis who lived abroad for a relatively short period of time will be awarded benefits similar to those received by new immigrants. What is more, single individuals (divorcees or married people immigrating alone are also eligible) making aliyah will not have to pay income tax for their first full year in Israel.
The Finance Ministry approved recommendations made by the Ministry of Immigrant Absorption and national tax authorities to cmoe up with a new tax status for returning citizens who will be classified as new immigrants for income tax purposes.
The income tax exemption has been extended to include all sources of income from abroad for a period of 10 years – instead of five – as was previously practiced. Tax exemption is currently provided for "passive income," profit gained from assets purchased abroad (interest, dividends, allowances, royalties and rent); and also allows for a four-year tax exemption for income generated by businesses providing they were owned for five years prior to immigration.
The new regulations will allow a new immigrant's Israeli income to be exempt from tax for 10 years following his or her immigration to Israel.
Bar-On: Reform to strengthen economy
Companies managed by new immigrants will be exempted from tax as well. The companies will not be redefined as Israeli-based merely because their shareholders immigrate to Israel. This measure is aimed at reassuring businessmen abroad who are contemplating making aliyah or returning to Israel. As long as the income is not produced in Israel, it will be tax exempt.
Income from abroad will no longer have to be declared. However, new immigrants and returning citizens will be obliged to report income from investments in Israeli assets that are made following their return and will, of course, be required to pay taxes on such investments.
Finance Minister Roni Bar-On said that "the new immigrant and returning citizen tax reform will assist the immigration of Jewish people to Israel and the return of Israeli citizens, including academics and business people; it will strengthen the Israeli economy and will help it grow."
Absorption Minister Ya'akov Edery said "the plan is a historic breakthrough that will allow many Jewish people from around the world and hundreds of thousands of Israelis abroad to make the decision to come to Israel without worrying about their financial state."
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