Emigration Tax Mulled As Answer to Deficit

YERUSHALAYIM -

The Israeli Tax Authority has been searching for a means to scale down a bulging state deficit, and thinks it may have found it—taxing emigrants.

The ITA’s “Committee for Legislative Amendments on International Taxation” is working on a proposal for an emigration tax, aimed at collecting a slice of profits made from the sale of assets accumulated during Israeli residency, according to a Globes report on Monday.

This comes in addition to a recently reported recommendation submitted to Tax Authority director Eran Yaacov for closing loopholes that allow emigrants to escape paying taxes. The committee suggested that criteria for severance of residence be made stricter for Israelis leaving Israel and seeking to end their tax liability in the country.

“The reform in residency criteria will have far-reaching effects on thousands of Israelis being relocated overseas and on their tax liabilities,” Globes noted.

In order to implement the emigration tax, which means knowing who owns what and when in order to ascertain liability, the ITA is considering several possibilities: requiring Israelis going overseas to list all their assets at the time; or requiring residents who leave to transfer their overseas assets to trusts, which will report the sale of assets in Israel; or the deposit of a bank guarantee, registration of collateral, etcetera.

In the final analysis, such guarantees may apply only to people whose total overseas assets exceed 5 million shekels.

The Tax Authority issued a long no-comment on the story: “Given the global changes that have taken place in recent years, the Tax Authority management believed that it was fitting to examine international tax policy and legislation for the purpose of adapting the law to the current era, and most importantly, creating certainty. For this purpose, the Tax Authority formed a committee to examine the matter. Since the committee has not yet formulated and submitted its recommendations, discussion of the matters in question is premature and futile.”