Your Taxes: Do taxis pay taxes?
So the moral is: Pay your taxes; our government needs every shekel and doesn’t like being taken for a ride.
Your Taxes Photo: Thinkstock/Imagebank
The taxis in New York are mustard yellow, in London they’re shiny black and in
Israel they’re polar white. They perform a valuable service getting you from
point A to B, they save you parking problems and the drivers know every sports
In Israel, in the unlikely event that you get ripped off, you can
photograph the license number painted on the door using your cellphone and
complain to the Transportation Ministry.
As for the fare, some Israeli
taxi drivers generously offer two approaches: Either they turn on the meter, you
pay the amount displayed and get a receipt when you reach your destination, or
you can agree in advance on a fare without the meter, in which case you’ll
probably arrive sooner but you won’t always get a receipt.
a third – more generous – approach has emerged. The taxi driver might offer you
a receipt for more than the fare you actually paid. Is this okay? Or is it an
early/late birthday present to bump up your expenses? And what’s in it for the
driver? All has now been revealed by the Israel Tax Authority in a dramatic May
Day announcement. Tax enforcement officials were surprised to discover that some
taxi companies have been renting out taxis on the “Fix” basis.
like this: Each taxi-license number gets applied to a number of taxi cabs
simultaneously; the taxi fares are not properly reported as income to the tax or
VAT authorities by the driver or the taxi owner; the driver pays a weekly or
monthly rent to the taxi owner in return for a paycheck, but the rent isn’t
properly reported as income by the taxi owner; the paycheck is effectively a
fake, but the taxi owner might claim the amount as an expense; the drivers might
not have a VAT registration.
Intrepid tax enforcers on April 30 raided
two taxi companies in the Jerusalem area and picked up 20 drivers and other
They are all now assisting with various inquiries
and registering for all tax purposes.
So the moral is: Pay your taxes;
our government needs every shekel and doesn’t like being taken for a
As always, consult experienced tax advisers in each country at an
early stage in specific cases.
Leon Harris is a certified
public accountant and tax specialist at Harris Consulting & Tax Ltd.