Tax Authority head: Talks of removing funds from Israel will harm economy

Eran Yaacov, the director of the Tax Authority, recently spoke at a forum for senior members of the taxation branch of Dun & Bradstreet and said that he's disturbed by the calls to withdraw funds and investments from Israel. 

He warned that this talk may have a negative impact on economics and the economy. In his words, Yaacov referred to the announcements by managers of some hi-tech funds that they've decided to withdraw funds and others who are considering doing so. First withdrawals of funds from bank accounts were also reported.

Hi-tech taxation is one of the most important sources of income in the tax field. Tax revenues last year totaled NIS 255 billion, a quarter of which came from the hi-tech industry through direct taxes, indirect tax payments of options and high-income tax on employee wages. 

Currently, the Tax Authority and the treasury's budget department are preparing the tax collection forecast for the years 2023 and 2024. The collection forecast will be adjusted to the decrease in the volume of collection in the taxation of the hi-tech sector, to fewer real estate sales and to the decrease in the volume of consumption due to the economic slowdown.

Yaacov stated that regarding the proposed judicial reform, he's troubled as a professional and as a citizen by one thing. From a financial point of view, there's a gap between the discourse and the atmosphere and statements regarding the transfer of funds. Transferring money is permitted, yet sometimes things don't turn out the way people wanted yet a process was created that no one intended to develop.

How will these statements affect investments?

Yaacov added that these statements may, directly and indirectly, affect the economy and investments. It's necessary, appropriate and obligatory to have a conversation regarding taxes, but Israel has a very favorable tax regime for doing business. Of course, there are things that need to be handled bureaucratically. 

He emphasized that international companies that come to Israel enjoy low tax rates and many financial benefits. In Israel, there's an excellent ecosystem for investments with the smartest people in the world, which supports a prosperous economy with a lot of initiative.

Yaacov further said that he's angered to know that creative people who grew up and were educated here try not to pay taxes. There are populations with reduced awareness of paying taxes.

He concluded by saying: "We're trying to build a solid relationship with the public and increase public trust through transparency and exposure of the authority's strategy, alongside upgrading the service." 

In order to strengthen the economy and investments, he said, we must continue to deal with and improve the bureaucracy to create business convenience.