'Google must pay tax,' protest in Tel Aviv
'Google must pay tax,' protest blimp outside company's
Tel Aviv office reads
By LAHAV HARKOV
04/03/2016
Kisch bill would require Google, Facebook and other
online companies with bases in Israel to pay VAT.
A blimp with the words “Google must pay tax” could be
seen in the sky next to the Internet giant’s Tel Aviv offices Sunday, launched
by MK Yoav Kisch (Likud) to promote a bill he is working on.
Kisch seeks to close a loophole by which multinational
corporations who do business online in Israel will be required to charge
Israelis value-added tax.
Currently, such companies do not have to register as
businesses in Israel for VAT payment purposes.
As Kisch has not finished drafting the bill, it is still
unclear whether or not Israelis will have to pay VAT on products they order
online from companies based abroad, with no offices in Israel.
Kisch argued that “the law should not differentiate
between major companies and small businesses.
“International corporations, which earn massive sums from
Israelis, must pay VAT like any other company in Israel,” he stated. “A free
market does not mean anarchy. This is a matter of hundreds of millions of
shekels that could be used for welfare, health and education, money that is
currently flowing out of Israel.”
The Likud MK differentiated between Intel, a company he
said “invests in Israel” and other companies that “take their earnings out of
Israel.”
“Why should we give up on hundreds of millions of
shekels?” he asked, arguing that making these companies pay VAT would create an
“egalitarian tax situation.”
Kisch shrugged off the argument that companies would
leave Israel if they had to pay more taxes, saying Israel is “a local market
par excellence. If they give up on [working with Israel], others will come
instead. What company would leave? Would McDonald’s close franchises in Israel
if taxes are raised? The level of danger is about the same.”
The Likud MK pointed out that many Western countries have
dealt with problems of multinational companies avoiding paying taxes, and the
OECD has addressed the problem as it applies to income tax.
The OECD and G20 countries released an international
framework late last year to tackle issues with Base Erosion and Profit Shifting
(BEPS), meaning tax planning strategies global corporations use to exploit
mismatches in different countries’ income tax rules to lower the companies’ tax
payments. According to the OECD website, a monitoring framework is expected to be
implemented in 2016 for countries that choose to participate.
OECD research, which began in 2013, shows BEPS causes
losses of 4-10 percent of global corporate income tax revenues, amounting to
$100-240b annually.
Because the OECD published a framework on income tax,
Kisch decided to focus on VAT.
The Israel Tax Authority has tried to pass a similar law
several times in recent years, without success.
Kisch said the reason is because they “give in to Google
and other strong companies that have the best accountants and lawyers and
public relations.”
“I’m helping them,” he added.
Google’s spokesperson said in response to the proposal:
"Governments make tax law, the tax authorities independently enforce the
law, and Google complies with the law in every country in which we operate,
including in Israel."
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