As part of Israel's ongoing efforts to encourage more aliyah and Israelis to return to Israel, the Ministries of Absorption and Finance announced a 10 year exemption from all taxes on foreign income, both passive and active. Furthermore, toshav hozer and Ole hadash will not have to report foreign assets or income as well during this 10 year period.

This new allowance applies to returning residents (toshvim hozrim) who have been overseas 10 years and new immigrants (olim hadashim). (A toshav hozer who returns to Israel between 2007 and 2009 will receive this privilege after only 5 years overseas.)

This change is designed to increase the financial incentive to relocate to Israel. Both the Minister of Absorption, Eli Aflalo and Minister of Finance Ronni Bar-On declared their support for this law designed to invest in people. Considered a revolutionary change, this joins other promotions for Israel's 60^th anniversary directed to toshvim hozrim and olim hadashim.

In addition, toshvim hozrim may elect to receive a one year 'settling in' period in which they will remain classified as foreign residents and not be subject to Israeli taxation. At the end of the settling in year, they will be subject to Israeli taxation. The 10 year exemption will start from the date they arrived even if they elected to receive the one year settling in period.