Israel, a state where income taxes can be as high as almost 50 per cent depending on income levels, but where returning citizens and immigrants get certain tax breaks, is not planning to take on the status of a tax haven for foreigners, the country’s tax authority has said.

Israel, a state where income taxes can be as high as almost 50 per cent depending on income levels, but where returning citizens and immigrants get certain tax breaks, is not planning to take on the status of a tax haven for foreigners, the country’s tax authority has said, according to media reports.

"We won't be a tax haven for foreign residents," Israel Tax Authority director general Moshe Asher was quoted as saying at a conference in Jerusalem. The Tax Authority planned to provide information to relevant countries about foreign residents' capital in Israel, and that these countries will reciprocate about the foreign assets of Israelis.

Asher said that foreign banks already provide information about Israeli citizens, under an expedited procedure at the Ministry of Justice. He advised relevant parties to voluntarily disclose information.

Israeli residents are taxed on their worldwide income, while non-residents are taxed only on their Israeli sourced income. New immigrants and returning citizens are entitled to certain benefits under Israel’s tax law. Returning residents and new immigrants are exempt from taxes for 10 years on income generated outside the country. This exemption covers all income, active or passive, such as interest, dividends, pensions, royalties and rental of assets.

The country joined the Paris-based club of major economies, the Organisation for Economic Co-Operation and Development, in 2010. The OECD has set out standards for automatic exchange of information and other procedures to try and stamp out tax evasion in recent years.

In a separate announcement today, the OECD said its economic survey of Israel will be published on 8 December, setting out the state of the Israeli economy.