Some Israelis have had it up to here with Internet giants such as Google and Facebook who allegedly make millions off the Israeli market are not paying taxes, claiming to be operating off-shore. Starting Sunday, a zeppelin bearing the English slogan on one side: “Google Must Pay Taxes,” and Hebrew on the other: “[Finance Minister Moshe] Kahlon [Must] Tax Google.” If you’re in Tel Aviv Sunday, near the 495 ft. high Electra Tower at 165 Yigal Allon Street, look for the distinguished protest airship.
It should be noted that the Zeppelin does not necessarily represent the view of the Israeli government, which may not wish to tax ad purchases by Israeli businesses on Google. The protest group is led by attorney Guy Ofir, who once protested Facebook Israel’s lack of attention to complaints from local users, by exposing the personal contact information of Facebook Israel General Manager Adi Soffer Teeni, so users should call her directly. According to Ofir, Israel loses on those ad transactions as much as a billion shekel a year, or about a quarter of a billion dollars.
“If Google alone starts paying its taxes, we could raise teachers’ salaries by 20%, or build another hospital for the periphery population,” Ofir told Mizbala, adding, “And that’s before we deal with Facebook and Amazon, who together also evade enormous sums in taxes from the state coffers.”
It should be noted that Google runs research facilities in Israel that pays taxable income for their employees. But rather than collect income tax on Israeli ads that are presumably already taxed by the US government, Israel would like to collect the VAT on purchases Israelis make from, say, Amazon. Base Erosion and Profit Shifting (BEPS), a project of the OECD, has been supporting legislation to aid individual members to collect the VAT on digital purchases made abroad by their citizens who live on their soil.
According to Israeli tax consulting firm Artzi, Hiba, Elmekiesse, Cohen, Israel’s VAT laws are excessively broad, at least on paper, so that when an Israeli tourist gets a haircut in London, in theory the barber must file and pay 18% to the nearest Israeli consulate.
But joking aside, on March 13 this year, the Israel Tax Authority published a legislative memorandum covering the issue of digital purchases made from, say, Amazon, by Israelis sitting by their computers in the Holy Land. Amazon would have to apply to the ITA VAT office and start collecting 18% on each Israeli purchase and sending it to Jerusalem. Would a giant like Amazon bother with the relatively puny purchases by Israelis? By themselves, probably not, but as more OECD countries discover how sweet it is to squeeze the American giant for payments, said giant may have to comply.
Contemplate all that on Sunday, as you watch the giant zeppelin shaming Google for all the city to see. Incidentally, seeing as Israel Police, the Tel Aviv municipality and the Israeli Aviation Authority have all Okayed the zeppelin’s flight, it may be that the Israeli government is not entirely unhappy with the effort.