Israel's Corporate Tax Revenue Down 24% This Year

by Robert Lee, Tax-News.com, London

12 August 2002

Falling revenues from the tourism and hi-tech sectors in Israel have meant that corporate tax collection is down substantially on last year, according to the Globes Online business news service.

Reporting on government figures obtained last week, the newspaper revealed that the situation is worse than had previously been thought, with net corporate income tax collection down 24% in January to July, compared with the same period last year.

Income tax collection from the self-employed also fell by around 12% in the first seven months of this year, according to Globes. The fall in income tax collected from salaried employees was a more moderate 5%, the Ministry of Finance figures showed.

Meanwhile, following the Knesset's recent decision to pass a far-reaching tax reform package, there are doubts among Israeli tax professionals that the government will be able to effectively enforce the changes, for example the provision calling for all Israelis receiving any type of investment income to file a tax return.

Concerns have also been expressed that the new 35% tax on foreign-traded stocks until 2006 will create massive enforcement problems.

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