YOUR TAXES: Below is an overview of announcements from the Israel Tax Authority and the Institute of Certified Public Accountants in Israel, some of which await final approval and Knesset enactment
By LEON HARRISCalculating taxes(photo credit: INGIMAGE)
On Thursday, July 9, the government presented its new safety net economic plan for the year to June 2021, to help Israelis hit economically by COVID-19. Two days later, on Saturday evening, thousands of self-employed people protested in Tel Aviv’s Rabin Square, saying that past aid had been too little, too late.By Sunday morning, business people began receiving SMS text messages that said more aid was on the way.What can we expect? Below is an overview of announcements from the Israel Tax Authority and the Institute of Certified Public Accountants in Israel, some of which await final approval and Knesset enactment.Already approved: immediate grants for second-round recipientsRecipients of the second wave of corona business grants (claimable in May if sales dropped 25%) should have received a similar amount again by July 15, but no more than NIS 7,500 by bank transfer.Awaiting approval: bimonthly income grants up to NIS 15,000Approval is being awaited for grants to freelancers and company owners of up to NIS 15,000 every two months (up to NIS 7,500 per month) covering the 14-month period up to June 2020. The grants range up to 70% of annual taxable income of up to NIS 640,000, if sales declined at least 40%.Claims may be made from mid-August on the Tax Authority’s website.Awaiting approval: sales-decrease grantsBusinesses and freelancers with annual revenues of up to NIS 100 million who suffered a sales decline of at least 40% may receive grants every two months as follows:• NIS 3,000 if annual revenues are NIS 18,000-100,000.• NIS 4,000 if annual revenues are NIS 100,000-200,000.• NIS 6,000 if annual revenues are NIS 200,000-300,000.• Up to NIS 500,000 or 15% of annual revenues if those annual revenues are NIS 300,000-100 million, seven payments in total, distributed every two months from July 30 through June 2021, based on a complex fixed cost/loss-of-profits formula.Awaiting approval: sales-decrease grants for businesses |set up January-February 2020• NIS 3,000 for an Osek Patur (“exempt” dealer) if annual revenues are up to NIS 100,000.• NIS 4,000 for an Osek Morshe (“authorized” dealer) if annual revenues exceed NIS 100,000.AWAITING APPROVAL: municipal tax refundFor businesses with annual revenues up to NIS 100 million if revenues declined 60%, up to June 2021.Beginning: back-to-work grantsAlready announced, the fourth wave of business grants will be claimable starting July 15, on the website of the Employment Service (not the Tax Authority). If certain conditions are met, the grants should be NIS 7,500 for employees taken back on or after June 1, 2020, and NIS 3,500 if taken back on or after April 19, 2020.In progress: furloughed and dismissed employeesFurloughed and dismissed employees in Israel receive unemployment pay from the National Insurance Institute. This will continue until June 2021, or until unemployment drops, from the current level above 20%, to less than 10%. The minimum furlough period is reduced to 14 days. Adaptation grants for furloughed and unemployed people ages 67 and above will continue until the end of 2020. Training programs are planned.CommentsThese are the bare bones of an evolving set of measures and proposals that are less generous and slower to arrive than similar measures in the US and UK. But Israel is looking further ahead than the US and UK.The measures are intended to operate in a largely automatic way, based on VAT and income data already held by the Tax Authority.Some would like to see more aid for the worst-affected sectors, such as travel, sports and entertainment.In addition, people in affected sectors should be offered training programs for new careers in areas less affected by the pandemic.Businesses should expand their marketing to cover physical and electronic marketing channels.E-commerce may be an answer: Trade with the world from your home over the Internet. In this area, international tax rules are still evolving for income tax, VAT/sales tax, and digital service taxes, not to mention customs and import duties.Of course, people would be happier if a COVID-19 vaccine would emerge, the light at the end of the coronavirus tunnel.Keep well!As always, consult experienced advisers at an early stage in specific cases. The writer is a certified public accountant and tax specialist at Harris Horoviz Consulting & Tax Ltd. leon@h2cat.com
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