As for Israel, the OECD says the legal and regulatory framework generally ensures that ownership, accounting and banking information is available for all relevant entities and arrangements.
By LEON HARRISDollar bills 370(photo credit: Steve Marcus / Reuters)
The Budget Law was passed by the Knesset on July 29 after much ado. On the last night around 4,000 amendments were proposed, but nothing apparently came of them. Over the next few weeks, this column will be discussing what was finally enacted.What was not enacted were proposals that would have required new residents and “senior returning residents” (who lived abroad five to 10 years) to start disclosing their non- Israeli-source income and gains derived in their first 10 years in Israel. Such income and gains are currently exempt from any Israeli tax liability, but they would have been become reportable on annual Israeli tax returns from this August 1 under the original proposal.The proposal was sheer bureaucracy, but it was intended to head off criticism from the Organization for Economic Cooperation and Development in an upcoming report. Instead, the proposal was hived off from the budget bill and may be debated and perhaps enacted by the Knesset in the coming weeks or months.In the meantime, on July 31, the OECD went ahead and published its report. It is couched in diplomatic language, and here is what it said: The OECD report The OECD Global Forum on Transparency and Exchange of Information for Tax Purposes has released Phase 1 “peerreview reports” assessing the tax systems of 13 jurisdictions, including Israel, for information exchange. Later this year, most of these reviews will feed into the ratings assigned to 50 other countries jurisdictions, backing Group of 20 and OECD efforts to strengthen tax cooperation and stamp out cross-border tax evasion.As for Israel, the OECD says the legal and regulatory framework generally ensures that ownership, accounting and banking information is available for all relevant entities and arrangements. The Israeli tax administration has broad access powers to obtain requested information for exchange-ofinformation purposes under Double Taxation Agreements, 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 double-tax conventions that provide for exchange of information in tax matters. Nevertheless, the Israeli competent authority does not have access powers to give effect to agreements that cover only exchange of information (as distinct from double taxation). In addition, in a limited number of cases, where a company has issued bearer shares, the owners of these shares may not be identifiable.Israel’s response to the findings and 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.Welcoming the reports on Israel and other countries, the chair of the Global Forum, Kosie Louw of the South African Revenue Service, said: “The Global Forum is applying pressure on all jurisdictions to implement the standard and cooperate effectively in tax information exchange. The publication of the ratings later this year will be a crucial moment for all those committed to fighting cross-border tax evasion.”Some comments The OECD is apparently acting in an insensitive manner.Moving to Israel involves a major upheaval, not tax avoidance.Many other countries discourage immigration by means of visa controls; tax is probably not uppermost in their minds. For well-known historical reasons, Israel is a country of refuge that offers a 10-year tax holiday to encourage immigration.As always, consult experienced tax advisers in each country at an early stage in specific cases.leon@hcat.coLeon Harris is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.
if(catID != 151){
var cont = `Take Israel home with the new Jerusalem Post Store
