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January 23, 2017 / 25 Tevet, 5777

Posts Tagged ‘tax’

Income Tax Employees’ ‘Italian Strike’ Threatening Israeli Economy

Sunday, December 18th, 2016

Israel’s Tax Authority employees have been on an “Italian” slowdown strike, Globes reported on Sunday, citing a CFO who said all tax withholding and VAT payments have been frozen. He was told by TA staff: “We’re on sanctions.” According to other reports, the TA has not been approving real estate deals for some time, and tax collections are being delayed as well.

Seeing as the tax year is about to end, many fear that taxes withheld in 2016 but not transferred to the TA may not count towards their 2016 reports, but be applied instead to 2017, which could cause hardships to small businesses, to the point of endangering their very existence. “There’s no one to talk with,” the CFO told Globes.

President of the Institute of Certified Public Accountants, CPA Izhar Kanne, has sent a letter to Finance Minister Moshe Kahlon, warning that the log-term sanctions at he TA “cause mortal injury to the business and economic activities of the country’s citizens and inflict enormous damage on the national economy.”

According to Kanne, the sanctions are hurting the ongoing work of Israeli businesses with businesses abroad, as the absence of TA approval, payments from Israeli businesses and academic institutions to these providers are delayed, which could have dire consequences, especially to academic institutions. He also pointed out that thousands of young couples are unable to purchase their first home because the TA has not been issuing to them the necessary forms.

Eventually, Kanne predicted, “the routine work of Israeli CPOs will be damaged, resulting in a situation where unjust fines would be imposed on their clients, while the state treasury would be hurting as well.”

Talks between the union and the Finance Ministry will resume Sunday, according to Calcalist, and on Monday there will be a meeting with Shai Babad, Director of the Ministry of Finance. The TA employees have been clear: “The sanctions will be further increased if they don’t negotiate with us to raise workers’ salaries soon – the TA will be frozen completely.”

The only TA operation that continues to run smoothly with no interruptions is providing compensations to victims of the recent wave of fires. Otherwise, critical damages will ensue both to Israel’s economy and to individuals and businesses. Vadim Evenstein, Income Tax Employees’ Committee Chairman, told Globes that the past four weeks’ sanctions suspended, among other things, all assessment discussions, which have a Dec. 31 statutory limit, meaning that come Jan. 1 2017, they would be lost to the state. “In just one assessment department we have files worth one billion shekel,” he warned.

The employees blame the Finance Ministry for being entrenched in its refusal to discuss raises. Meanwhile, the same employees point out, Israeli banks have given as much as $400 a month in raises to their employees who are on a par with TA employees. “Our workers have degrees in accounting and other degrees, yet they receive the lowest wages – the highest academic status [in the civil service] with the lowest pay,” Evenstein told Globes. “Is it any wonder our most gifted workers leave after three or four years, having gained knowledge and experience?”

JNi.Media

Goldstein on Gelt: What Does “The Laffer Curve” Say is the Best Tax Rate?

Monday, November 7th, 2016

Economist Arthur Laffer, creator of the “Laffer Curve” and author of Return to Prosperity: How America Can Regain Its Economic Superpower Status, explains why high taxes don’t necessarily produce more income for the government. Find out why governments should consult with the Laffer Curve in order to create prosperity and growth.
How should you invest to increase income?

Governments can increase income through taxation, but individual investors need to think about others ways to generate wealth. Douglas Goldstein, CFP®, discusses how to invest when markets hit rock bottom and describes investing strategies in order to achieve long-term goals.
Don’t forget to sign up for the upcoming free webinar on how the U.S. elections may affect your retirement savings at: www.Profile-Financial.com/webinar
The Goldstein On Gelt Show is a financial podcast. Click on the player below to listen. For show notes and contact details of the guest, go to www.GoldsteinOnGelt.com

 

Doug Goldstein, CFP®

All-Time High Israeli Tax Collection: $57 Billion So Far in 2016

Monday, October 10th, 2016

Over the first 9 months of 2016, the Israeli tax authority has collected an unprecedented 216.1 billion shekel, or about $57 billion, a full 5% more than during the same period in 2015, the Finance Ministry’s Accountant General’s Management Information Division reported Sunday. In fact, in September 2016 alone Israel has collected $6.67 billion, 12.3% more than in September 2015.

According to the report, tax collection has far surpassed early forecasts at the Finance Ministry, so much so that the Finance Ministry’s Chief Economist Yoel Naveh in mid-July pushed up the 2016 forecast and set it at 282.5 billion shekel, or $74.5 billion.

The new, record tax collection is expected to impact the government budget deficit. The 2016 budget permits government a deficit of 2.9% of GNP, or as much as $9.23 billion. But based on the tax collection bonanza, it appears government could go on a mad spending spree, especially on security, and still end up with only a 2% of GNP deficit. The accumulating government deficit over the past 12 months stands at only 2.2% of GNP.

Overall, government expenses in September stood at $8.05 billion, out of which expenses came up to $6.7 billion, interest payments on the national debt was $500 million, and interest and repayment of principal to Social Security came to $820 million.

Since the beginning of 2016, government expenses came to $55.28 billion, a 7% rise compared with the same period last year. Of that, civil ministries’ expenses rose by 8.9%, while the security apparatus showed more restraint with only a 2.2% rise in spending. The original budget plan, however, called for an 11.4% rise for civil services, while the security apparatus was actually scheduled to go down by 3.7%.

JNi.Media

A First: Kibbutzniks to Pay Personal Income Tax

Thursday, August 4th, 2016

Individual kibbutz members will be required to pay a 25% personal income tax as well as the Social Security Healthcare tax starting next January, according to a move by the Finance Ministry, Israel Hayom reported Thursday. The new taxes are expected to enrich the Finance coffers by close to $80 million annually, and the Social Security income by about $50 million.

Since the beginning of communal history, each kibbutz used to pay a corporate tax for all the members, and even after the change in taxation kibbutz members without outside income will not be required to file individually. But over the past few decades many kibbutz members have been working off the kibbutz grounds, contributing a portion of their income to the cooperative — and the Israeli tax authority would like to take a peek at those monies.

The Finance Ministry’s new rule must still go through the Knesset Finance Committee for approval, and the agricultural lobby is expected to put up a hard fight against the changes.

Amitai Porat, the Religious Kibbutz Movement Secretary General, and Nir Meir, the Kibbutz Movement Secretary General, on Wednesday wrote Prime Minister Netanyahu requesting that he halt Finance Minister Moshe Kahlon’s proposed changes in the tax code regarding kibbutzim. They told the PM that “Minister Kahlon is not interested in meeting us to find a solution that would make it possible to reexamine the tax code while maintaining and protecting the kibbutz character and the communal life in which we believe.”

David Israel

Knesset Considering Tax Breaks for Judea and Samaria Communities Facing Security Threats

Thursday, July 28th, 2016

The Knesset plenum on Wednesday approved in a preliminary reading a bill that would make communities in Judea and Samaria eligible for tax breaks based on the security threats they face.

The so-called “benefits map” approved by the Knesset in 2015 fixed standard criteria for awarding the benefits based on socio-economic criteria. The bill, sponsored by MK Bezalel Smotrich (Habayit Hayehudi) would add security risks to the criteria entitling Judea and Samaria communities to benefits.

The criteria would be based on Defense Ministry assessments of the security risks communities face in a manner similar to the way benefits are awarded to Israel’s border communities.

The explanatory notes accompanying the bill state that the tax breaks are meant to “encourage strong populations to reside in areas the state views as serving a national interest” and “add to the benefits map those communities in Judea and Samaria facing security threats.”

“Settlements in Judea and Samaria have for years stood up heroically against continuous terror inside the communities and on the roads. We need to encourage them with, among other things, tax benefits,” the bill’s preface reads.

Prior to the vote, MK Smotrich said, “This law will enable thousands of families living in Judea and Samaria, who suffer from security threats, to receive what they deserve and to be equal in rights to the rest of Israel’s residents. The national government is returning Judea and Samara to the settlement map. There’s a long way to go, but this is a step in the right direction.”

Meretz MK Esawi Frej said, “Have you heard of the Yotvata dairy farm? It should [learn from] Smotrich how to milk the state. You are milking the state using all kinds of improper methods. You [have the nerve] to take an additional 150 million shekel (about $40 million) for a few outposts.”

42 MKs supported the bill in its preliminary reading, and 36 opposed. The bill will now be sent to the House Committee, which will determine which committee will prepare it for its first reading.

David Israel

Knesset Committee Approves Submission to US IRS Tax Compliance Act

Tuesday, July 12th, 2016

After weeks of debates, on Monday the Knesset Finance Committee approved a bill to apply the Foreign Account Tax Compliance Act (FATCA), which the US has already signed with 113 countries. The 2010 federal law enforces the requirement for US citizens living abroad to file yearly reports on their non-US financial accounts to the Financial Crimes Enforcement Network (FINCEN). The law also requires all foreign financial institutions (FFIs) to search their records and to report the assets of US citizens living abroad to the US Department of the Treasury.

Finance Committee Chairman MK Moshe Gafni (United Torah Judaism) was able, after lengthy negotiations with the Israeli Finance Ministry, to increase the protection of Israeli citizens whose information will be handed over to the US, and reduce in half (from about $27 thousand to about $13 thousand) the sanctions against financial institutions that fail to comply with new law for technical reasons. Gafni also managed to change the definition of charity organizations in the Haredi community (Gmachim), changing their definition from “financial institutions” to “organizations that benefit the public,” thus removing them from the FATCA zone.

The committee also succeeded in repelling the Israeli tax authority, which wanted initially to be able to use information gathered by Israeli banks for FATCA to their own local tax collection ends. As Gafni put it, “This is a bad law, and to come now and use it for other purposes that have nothing to do with its essence would be unthinkable.”

The issue of forcing foreign financial institutions and foreign governments to collect data on US citizens at their own expense and transmit it to the IRS has been attacked outside Israel as well. Former Canadian Finance Minister Jim Flaherty objected to the law’s “far-reaching and extraterritorial implications” which require Canadian banks to become extensions of the IRS and could jeopardize Canadians’ privacy rights.

There have also been reports of many foreign banks refusing to open accounts for Americans, making it harder for Americans to live and work abroad.

JNi.Media

Haredi Party Spearheading Effort to Protect Israeli Religious Charities from US Tax Authorities

Tuesday, June 7th, 2016

The heads of charity organizations in the ultra-Orthodox society, commonly known as Gemachim, received at least a temporary measure of relief from the Knesset Finance Committee, chaired by MK Moshe Gafni (UTJ), ahead of a new amendment of the Income Tax Act that takes effect in September and compels Israeli financial institutions to report through the local tax authorities on the Israeli financial affairs of US citizens. The amendment is the result of the Foreign Account Tax Compliance (FATCA) agreement between Israel and the US, which was a prerequisite for continued cooperation between Israeli and American financial institutions.

It’s not much, but MK Gafni demanded that the Finance Ministry and the Bank of Israel order the banks to give the Gemachim time until the end of June to resolve their status as public institutions, which he hopes would allow them to exclude themselves from the FATCA rules. Gafni envisions a tweaking of the amendment to exclude groups with deposits of less than $50 thousand, or holdings worth less than $50 million.

According to Chairman Gafni, the new regulations could bring the collapse of the Gemachim. “The Israeli government signed an agreement with the US government without considering the disastrous consequences for one of the most important enterprises of the Jewish people that has existed for millennia — the charity and mutual aid societies,” Gafni said, explaining that the Gemachim are “the only means at the disposal of a person under financial duress to receive an interest-free loan to get back on his feet.”

MK Israel Eichler (UTJ), Chairman of the Public Petitions, summoned Dr. Ilan Steiner, Director of the Bank of Israel Currency Department, to his committee hearing, to warn him against another aspect of the US attack on these charity institutions. According to Eichler, banks are being forced under pressure from foreign governments to close the accounts of Gemachim accounts, “in the name of ‘fighting terrorism’ and stopping money laundering, the IRS and the American government have become supervisors of all bank accounts around the world including in Israel. Everyone has to go through their inspection, so the Gemachim have received a letter that they will not be able to keep their bank accounts anymore.”

MK Eichler told Dr. Steiner: “I hope that the Bank of Israel find a way to abide by the agreements with the US while not mixing up the Gemachim with the war on terror. The banks must not become a burden and a restriction on associations and charity organizations who want to help people and do not engage in terrorism. There are limits to the madness of the banking system. We must not allow the charity organizations and Gemachim to be paralyzed by American pressures.”

The issues of compliance regarding money laundering and the war on terror stem from the side benefits of an IRS act that was intended to make sure US citizens who make money abroad share some of it with Uncle Sam. According to the IRS, FATCA targets tax non-compliance by US taxpayers with foreign accounts, focusing on individuals’ reporting about foreign financial accounts and offshore assets, as well as by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.

Using the US’ enormous economic clout, FATCA bullies the world’s financial institutions into reporting on their American clients to Uncle Sam. Under FATCA, to avoid being withheld upon, foreign financial institutions must register with the IRS and agree to report to the IRS about their US accounts, including accounts of foreign entities with a substantial US ownership. Foreign institutions that enter into an agreement with the IRS to report on their account holders may be required to withhold 30% on certain payments to foreign payees if such payees do not comply with FATCA.

Talk about working for the Yankee dollar.

According to The Marker, Gemachim stand to suffer three different ways from the new law: instead of permitting a Gemach to transfer money into their accounts, they could now be questioned regarding the source of the funds and whether or not tax was paid on them in the US; each deposit could be subject to harassment by the bank, in order to verify that it is not part of a money laundering scheme; and the Gemach could be saddled with a new definition as a financial institution, and as such would be compelled to report on its fund sources to the IRS or face criminal sanctions.

JNi.Media

Printed from: http://www.jewishpress.com/news/breaking-news/haredi-party-spearheading-effort-to-protect-israeli-religious-charities-from-us-tax-authorities/2016/06/07/

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