Press releases and law firm thought leadership
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A New Governmental Proposal to Significantly Narrow the Tax Benefits for New Immigrants and Returning Residents in Israel
On November 5, 2012 the Israeli Parliament (Knesset) adopted a proposal of the Israeli Ministry of Finance and passed legislation providing for a temporary tax relief with respect to the recapture tax applicable to certain Israeli companies holding undistributed earnings that were previously exempt from Israeli corporate income tax under tax incentive programs.
This note provides a brief description of the background for this new provision and summarizes its main aspects.
As part of Israel's 60th anniversary, an extensive tax reform was recently enacted, making Israel an attractive tax jurisdiction for individuals becoming Israeli residents for tax purposes (whether arriving for the first time or returning to Israel after a certain period of time abroad). This brief memorandum introduces the primary tax benefits applicable to new and returning residents.
In October 2008, the Israeli Supreme Court issued a precedent setting decision in the case re Pi-Glilot Oil Terminals and Pipes Ltd. (the Pi-Glilot case). The Court decided that, under the certain circumstances of this case, financial expenses due to a loan for the purpose of dividend distribution will be eligible for deduction.