Knesset approves ‘trapped profits’ law

The Knesset approved the second and third readings of a bill to release the “trapped profits” of multinational corporations by 38 votes to 21 Monday, in a move the government says will boost state revenues by NIS 3 billion next year.

Until now, the Law for the Encouragement of Capital Investment has exempted certain multinationals from paying company and dividend taxes, as long as they invest their profits in further activities in Israel.

Under the amendment, corporations will be permitted to release part of their trapped profits for investment abroad as long as they agree to allocate at least half of the profits to investments inside Israel. In return, the state will charge them a reduced company tax rate of 6 to 17.5 percent.

Finance Minister Yuval Steinitz thanked the Knesset for showing “maturity and responsibility” in the face of what he called “populist criticism.”

Had it not approved the bill, he added, the government would have been forced to collect billions from its own citizens instead.

Opposition MKs slammed the government over the law, with Meretz Chairwoman Zehava Gal-On calling it “a gift for tycoons,” Shlomo Molla (Kadima) branding it “a slap in the face,” Majallie Whbee (Kadima) describing it as “an insult to the intelligence of the public,” Nitzan Horowitz (Meretz) naming it “the law of the burglars,” and Dov Khenin (Hadash) labeling it “scandalous.”