Tax chief: Israel has become world’s laxest tax haven
Moshe Asher: Exempting immigrants and returning residents from reporting is unjustifiable as a matter of principle.
The “Milchan Law,” which grants tax and reporting benefits to new immigrants and returning residents and is the subject of the suspicions against Prime Minister Benjamin Netanyahu in the gifts case (Case 1000), was discussed today at the Knesset State Control Committee, chaired by MK Shelly Yachimovich (Zionist Union). Netanyahu is suspected of working on behalf of the law, which provides Arnon Milchan with extraordinary tax benefits and an exemption from reporting assets.
During the State Control Committee discussion, it emerged that not only were there repeated attempts by Israel Tax Authority head Moshe Asher, with the support of the minister of finance, to repeal the benefits granted under the law rebuffed, but an attempt to amend the law in the 2019 Economic Arrangements bill, so that it would not extend the exemption to 20 years, instead of 10 years, was also split off from the Economic Arrangements bill and buried.
Explaining why he tried to tried to have the law repealed throughout his term in office, which started in 2013, Asher said, “The exemption from reporting is unjustifiable as a matter of principle, and there is no reason why it should be granted. We have been working in the dark for 10 years: we don’t know how much the exemption costs, how many people received it, how many people immigrated to Israel because of it, how much they invested, how much we received, or how much we lost.”
He added, “It has been a decade since Israel became one of the world’s best – or worst – tax havens that there are. We have yet to find a single country in the world with a similar law.”
Asher continued, “The law is causing great damage to Israel’s image. Another thing that should be realized is that the law encourages making investments overseas, not in Israel, because immigrants and returning residents pay tax on investments in Israel as soon as they arrive. We tried year after year to have the law repealed. Repeal passed its first reading in 2013-2014, but then it was split off from the Economic Arrangements Law and not promoted because of ‘general considerations’ of getting the budget passed. The attempt to repeal Section 14(D), which grants the minister of finance the option of extending the exemption by 10 more years, was also split off from the Economic Arrangements bill in the 2019 budget, with the claim that it would be treated in the ordinary way as a separate bill. In our opinion, it is time to amend this law, and the sooner the better.”
