During December 2011 the Knesset reviewed these recommendations and approved a series of amendments to Israel's tax law.
People who earn more than NIS 1 million a year would pay a surtax of 2% on their income and taxation of capital gains would not be decreased to 20% but remain at 25% in 2012.
Taxes are charged based on annual income; salaries in Israel are usually discussed at the monthly rate so these are included for convenience.
A corporation is deemed to be subject to Israeli taxes if its activities are managed and controlled within the State of Israel or established under its laws.
[13][14] Multinational companies that provide services to Israel through the Internet, such as Google and Facebook, must pay VAT.
These benefits were extended in 2008 in commemoration of Israel's 60th anniversary to try further to provide incentives for Jews to make Aliyah.
The law was introduced in order to persuade many Israelis, who had made yerida (left the state of Israel) to return.
Only income from activities in Israel and from Israeli investments and assets that is generated following Aliyah or return to the country is subject to reporting and taxation according to regular tax laws.
This covers all income, active or passive, such as interest, dividends, pensions, royalties and rental of assets.
[citation needed] New immigrants and returning residents can fill in an application form for an adjustment year.