Budget proposals target olim

YOUR TAXES

By Leon Harris

Now that the Israeli election is long forgotten, government officials have circulated their decisions on what state budget proposals should be presented to the cabinet for approval and submission to the Knesset for enactment. Some of these proposals take aim at olin in an unpleasant way.

According to the proposals, a survey of the Global Forum on transparency and exchange of information has rated Israel “partially complaint.” This is apparently considered a low rating. Consequently, the European ban of Reconstruction  and Development (EBRD) and the World Bank apparently have announced they will stop cooperating with Israel if these “defects” are not remedied by the end of October.

Israel apparently has notified OECD it will act to amend the law to facilitate information exchange according to international standards.

What is proposed?

First, it is proposed to enable the government to exchange tax information with other governments. Currently Israel’s tax treaties allow this mainly to prevent double taxation regarding specific taxpayers, not as part of a general campaign (“no fishing expeditions”). Now it seems fishing expeditions will be allowed. Also, Israel ma now sign up to multilateral tax treaties , such as the upcoming OECD common reporting standard.

Second, it is proposed to allow the Israel Tax Authority (ITA) to obtain more information electronically from Israeli financial institutions about business and private clients’ accounts. The information will be passed to a special ITA unit that will have 45 days to review it and either delete it or pass it on to investigative tax officials if income or payments appear to have been under-reported by NIS 500,00 for the purposes of income tax, VAT or land-appreciation tax.

Third, changing are proposed regarding new Israeli residence and so-called senior returning residents (who lived abroad 10 years)- collectively referred to as olim.

Currently, olim are exempt from Israeli tax on overseas income and gains for 10 years. They are also exempt from DISCLOSING overseas income and assets to the ITA for the same 10 years. Under the proposals, the tax exemption will stay, but the disclosure exemption will be curtailed for olim who arrive in Israel on or after January 1, 2016.

In the year of arrival and the following tax year, olim would only need to disclose of foreign income and assets if a foreign body demanded this from ITA. Thereafter, olim would need to disclose their foreign income and assets each year anyway.

Comments 

Two years ago, similar disclosure proposal were included in the budget and caused a howl of protest until they were dropped. Now it seems they are back.

The new proposal may not increase the tax olim pay- just increase disclosure and bureaucracy. But many potential olim may rightly or wrongly assume a repeal of the tax exemption is around the corner.

Olim thinking of moving to Israel after January 1, 2016, might consider going through the aliya process before that date before they value their privacy. It is hard to believe that olim are mainly responsible for Israel’s woes with he Global Forum, the OECD the EBRD and the World Bank. Olim appear to be a scapegoat. To sum up, the Israeli budget proposal. are not boring, and they may be controversial. It remains to be seen what will be legislated.

As always, consult experience tax advisers in each county at an early stage in specific cases. 

leon@hcat.com

Leon Harris is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd. b

Israel Railways begins laying Jerusalem-Tel Aviv tracks

By Hedy Cohen

GLOBES

Israel Railways reached a major landmark in the construction of the high speed railway to Jerusalem: the first line to run on electricity. The company began laying tracks on the western section of the line, in the Ayalon Valley region.

The project is estimated to cost about NIS 7 billion, including the construction of two 5-kilometer tracks from Tel Aviv’s Haganah Statin to the entrance of Jerusalem, near the International Convention Center, as well as five tunnels, totaling 20 kilometers, and eight bridges.

Israel Railways also announced Monday that work was completed on the final section of the Negev line between Ashkelon beersheba.  The project connected the rail from Ashkelon to the Goral Junction and to the existing railway in Beersheba, as well as the national rail network.

“The Negev railway is first and foremost a Zionist project,” Israel Railways CEO Boaz Tzafrir said. “The direct line between Ashkelon to Beersheba, through Sderot, Netivot and Ofakin, will boost employment in southern Israel, attract young couples to the region and increase the quality of life of hundreds of thousands of southern Israelis.”

“Alongside that project, we recently began laying the new tracks on the high speed railway to Jerusalem, where the development work has been going at an accelerated pace,” he said. “It’s a vision that is now becoming a reality.”

Public transportation fares to Tel Aviv to be cut

By Hedy Cohen

GLOBES

Public transportation fares will be slashed as part of an effort by Transportation Minister Yisrael Katz and Finance Minister Moshe Kahlon to contend with the work on the light rail in Tel Aviv and to encourage drivers to leave their cars at home. The projected costs of the plan stand at NIS 120 million.

The planned reform of the system would institute unified pricing for each of the major metropolitan areas: Tel Aviv , Jerusalem, Haifa, and Beersheba. It would radically decrease costs by allowing passengers 90 minutes to transfer between different modes of transportation – bus, train,light rail, and MetroFi rapid bus transit systems without paying an additional charge, as long as they remain within the designated area.

The plan also calls for significantly reducing the prices of monthly hybrid passes that allow unlimited rides on both trains and buses throughout the metropolitan area.

For example, under the new regulations, a monthly pass for rail and bus use between Tel Aviv and Rishon Lezion would cost NIS 252 instead of NIS 400, a decrease of 37 percent. Between Tel Aviv and Rehovot, the cost of the pass would fall to NIS 286 from NIS 491, down 42%, while commuters making the journey between Tel Aviv an Netanya would save 30%.