A historic reform which gives new immigrants and returning citizens a ten year exemption for reporting and paying taxes on income from abroad will reach its tenth anniversary next month, Haaretz reported. The first immigrants to benefit from the reform will then lose their exemptions.
The reform was passed in 2007 to encourage aliyah and Israeli citizens abroad to return. New immigrants and returning residents who moved to Israel in 2007 will have to begin reporting and paying taxes on all income from abroad in 2017.
The expiration of the exemptions has raised fears among citizens that they may now be subject to back-taxes, especially from the National Insurance Institute. They are also worried that the Israel Tax Authority could decide to audit them to determine if they were indeed eligible for the exemption.
The reform retroactively applied to all immigrants who made aliyah after January 1, 2007. Those who came earlier have been declaring their income from abroad, if any, for years, and since there is a reciprocal agreement with the IRS, if they file US tax returns, the information is available anyway.