Your Taxes: Coping with the recession and other questions

Here is a selection of ideas to check out.

By LEON HARRIS
April 30, 2009 07:35
2 minute read.
taxes 1 88

taxes good 88. (photo credit: )

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later Don't show it again

Readers are invited to send in their Israeli tax questions to this column. Please keep them general. Here are two recent questions. How can our Israeli company cope with the recession? Here is a selection of ideas to check out:

  • Repatriate cash from foreign subsidiaries: Dividends distributed to an Israeli resident company in 2009 will be subject to only 5 percent tax (instead of 25% usually) if certain conditions are met. This applies to dividend income from a foreign source, which is used in Israel in 2009, or within one year after actual receipt of the dividend, whichever is later. Alternatively, dividend income may be offset against current-year losses from a business or securities, as well as current-year passive losses from a foreign source, such as exchange losses on loans to foreign companies.
  • Internal reorganization: Take advantage of lower market values to reorganize a group corporate structure ahead of any exit or IPO (initial public offering).
  • Recharge your Israeli headquarter costs to foreign subsidiaries: This must be done in a reasonable way. There may sometimes be a double advantage: (a) lower tax on such amounts in Israel than abroad if the Israeli company enjoys tax incentives or has tax losses; (b) use of money in Israel without declaring a dividend.
  • Update your transfer pricing: If a profit-based method is used to set prices of cross-border transactions within a group of companies, the present climate of reduced profits or even losses may justify a transfer-pricing amendment that shifts profits.
  • Review your intercompany finance: Current market risks may justify an increase in interest rates on intercompany loans or other arrangements such as profit-sharing joint ventures. Don't forget to address foreign-exchange exposures.
  • Supply-chain improvements: Consider whether to move from local procurement to central procurement via an entity located in an appropriate tax-efficient location. Also consider placing intangible assets (technology, brand names, etc) in a tax-efficient regime, such as the Israeli privileged-enterprise regime, while asset values are low.
  • When is my personal tax return due? Individuals required to file a tax return for the 2008 tax year must do so by May 31, 2009. Not everyone is required to file a tax return; consult an accountant if you are unsure. The due date for people not in business (and not required to keep double entry books) was postponed from April 30 to May 31 this year due to Pessah and other events. As always, consult experienced professional advisers in each country at an early stage in specific cases. leonharr@gmail.com Leon Harris is an international tax specialist.

    Related Content

    The Teva Pharmaceutical Industries
    April 30, 2015
    Teva doubles down on Mylan, despite rejection

    By GLOBES, NIV ELIS