International high-tech companies will not allow their Israeli subsidiaries to bear the increase in use value of company cars for employees, says the Israel Forum of Chief Finance Officers. The subject came up at yesterday’s meeting of foreign companies of the CFO Forum. Israeli companies are expected to following suit.
The position means that tens of thousands of employees of international companies’ Israeli subsidiaries will have to bear the cost of the tax hike on company cars, or else buy their own cars.
One participant at yesterday’s meeting said, “Parent companies aren’t interested in this issue between employees and the tax authorities. If the Israel Tax Authority wants to collect more money from employees, that’s of no interest to the parent company.”
Other participants said the companies have no plans for buses for employees, which are not cost effective because of the companies’ flexible work schedules. They said the decision to raise the use value of company cars would have a major impact on Israel’s competitiveness vis-a-vis other countries.
Participants said that if employees decided to forego company cars because of the higher taxes, and demand pay hikes instead, this was liable to increase salary costs and benefits, which would also harm Israel’s competitiveness.
The CFO Forum said the Ministry of Finance failed to consider other points as well. One is that most of the Israeli subsidiaries of international companies employ tens of thousands of people, and are based in outlying areas such as Migdal Ha’Emek, Yokne’am and Kiryat Gat because of benefits obtained for setting up shop there. If the use value of company cars is raised, it will make it harder to recruit employees, because they won’t be able to get to work, and will go to work for companies in central Israel - directly contrary to Israel’s national interest.
Published by Globes [online], Israel business news - www.globes.co.il - on March 27, 2007
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