TEL AVIV – “Google must pay tax” was the slogan emblazoned on a blimp next to the Internet giant’s Tel Aviv offices on Sunday, launched by MK Yoav Kisch (Likud) to promote a bill he sponsored.
Kisch, a pilot, is one of many activists seeking to close a loophole by which multinational corporations that do business in Israel avoid charging Israelis value-added tax by not registering in the country.
Kisch argued, “The law should not differentiate between major companies and small businesses.”
“International corporations, which earn massive sums from Israelis, must pay VAT like any other company in Israel,” he said. “A free market does not mean anarchy. This is a matter of hundreds of millions of shekels that could be used for welfare, health, and education; money that is currently flowing out of Israel,” the MK said.
He added that while companies like Intel invest in the Jewish state, others like Google “take their earnings out of Israel.”
“Why should we give up on hundreds of millions of shekels?” he asked, adding that making these companies pay VAT would create an “egalitarian tax situation.”
Kisch dismissed the counterargument that companies would leave the country if they are made to pay higher taxes, saying Israel is “a local market par excellence. If they give up on [working in Israel], others will come instead. What company would leave? Would McDonald’s close franchises in Israel if taxes are raised? The level of risk is about the same.”
The Israel Tax Authority has failed to pass a similar law several times in recent years, something Kisch attributes to “the best accountants and lawyers and public relations” that Google and other multinationals employ.
It is still unclear whether or not the new legislation means that Israelis will have to pay VAT on products they order online from companies based abroad that have no offices in Israel.
Google’s representative said in response to the proposal: “Governments make tax law, the tax authorities independently enforce the law, and Google complies with the law in every country in which we operate, including in Israel.”