Jul.10, 2012 | 6:44 AM–Despite fierce opposition in the Knesset, and even within his own ministry, Finance Minister Yuval Steinitz has decided to grant a huge tax break to large multinational companies operating in Israel.
If he gets his way, the companies would receive reductions of 40% to 70% on corporate taxes on so-called “restricted profits,” which are profits the firms have earned in Israel that must remain here, unless they pay higher taxes on the money.
The Israel Tax Authority will offer the reduced taxes if the money is paid by the end of 2013 and if it is invested in Israel, according to the bill the ITA published on Monday. The tax authority says the proposed law will “aid the Israeli economy at this time.”
The treasury wants to use the money next year, to cover a shortfall in tax revenues, as well as the budget deficit.
The tax debate relates to multinationals like Intel, Teva and Israel Chemicals that have accepted state aid under the Encouragement of Capital Investments Law, which has entitled companies, including some of the world’s biggest, to billions of shekels in state support over the years.
The law was recently amended to allow them to repatriate profits, but companies have not been able to act on the change because of the continuing debate over the tax rate to be imposed.
Under the present law, companies are required to pay 10% corporate income tax. If they opt to repatriate the profit overseas as dividends, they are required to pay another 15%, bringing the total tax due to 25%. But Steinitz’s order would change all this…Read More>>