The Taxman Cometh: Israel Readies Tax Bill for Google, Facebook

Chris Jackson/Getty Images
Chris Jackson/Getty Images

Global internet giants Google and Facebook can expect to receive a comprehensive tax bill from Israel within the next 12 months, according to a report in the financial newspaper TheMarker.

Moshe Asher, chairman of Israel’s Tax Authority, is reported to have revealed that work on preparing tax bills is underway. The authority is now exploring ways to make its calculations, the newspaper reports.

The authority will have to decide what percentage of the Silicon Valley multi-national corporations’ profits derive from their Israeli customers, how they should be should be taxable in Israel and what sums have been repatriated or reported offshore. Google, Apple, Facebook and Amazon – a group of firms known by the acronym GAFA – have long been criticized for their tax-optimizing practices although all firmly claim they operate within the law.

“Ultimately, taxes can be charged based on their operations in Israel,” Asher told TheMarker. “Our goal is to obtain as much data as we can, even if many of these figures are held outside of Israel. Within a year we’ll issue these companies tax bills.”

Israel’s corporate tax rate is 24 percent of profits, with taxes based on whether companies are considered to have a permanent presence in the country. However, companies are eligible for tax breaks in return for delivering significant capital investments.

Google has previously fought off such claims with success, the most notably being against French tax authorities.

As Breitbart News reported, earlier this year a French court annulled a 1.1 billion-euro ($1.27 billion) tax adjustment imposed on the Californian company by France’s tax authorities, saying the way the firm operates in France allows it to be exempt from most taxes.

Google has minimized its tax bill in France and other European countries by keeping its headquarters in Ireland, where rates are lower. The strategy has helped Google boost its profits and stock price although the company did agree to pay $334 million to the Italian government to cover a back tax bill last May.

The settlement covers taxes on profits from 2002-15, which the Italian government said Google made in the country but transferred to other European countries where corporate taxes are much lower.

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