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Israeli news site suggests country’s Tax Authority is targeting Israelis in Cyprus

Israeli business news site Globes, has reported that the country’s Tax Authority recently launched an operation to identify assets, income, and companies of Israelis relocated to Cyprus and on which the Tax Authority believes tax should be paid in Israel.

According to the news report, “Low taxation and cheap real estate have made nearby Cyprus an attractive destination for Israeli investment, with many Israelis moving there. Against the background of the increasing attractiveness of Cyprus as a relocation and investment destination for Israelis, the Israel Tax Authority recently launched an operation to identify assets, income, and companies of Israelis on the neighboring island on which the Tax Authority believes tax should be paid in Israel.”

The site reported that it had learned that “because of the need to make up a revenue shortfall, and as part of the Israel Tax Authority director Shay Aharonovich’s campaign against tax evasion and the black economy, the Tax Authority has set its sights on Israelis who run businesses in Cyprus and don’t report their income on the grounds that they or the companies in question are Cyprus residents, while in fact they have not relinquished Israeli residency.”

"We are focusing on activity in Cyprus because of the trend of Israelis moving there, and buying real estate and forming companies on the island," a senior Israel Tax Authority source told Globes.

The news outlet noted that, in recent years, Cyprus had become an attractive destination, among other things thanks to a taxation policy. The island’s attractiveness was further boosted by the Covid-19 pandemic, the dispute over the Israeli government’s judicial overhaul programme, the trend of relocation to Cyprus, and war, Globes said.

“Sources inform ‘Globes’ that the Israel Tax Authority has started to examine Israelis’ ties with Cyprus. Among other things, it is checking how many times businesspeople fly to the island, how many times they exit and enter Israel, and cross-checking information on offshore companies belonging to Israelis and former Israelis. The data are part of information sharing arrangements with several countries, and they expose the Israeli link to a Cypriot company via chains of companies around the world,” the news portal reported.

It also said that tax lawyers had revealed that concerned clients had already got in touch about the issue.

(Source: Globes)

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