The government will collect more than NIS 3 billion in revenues from trapped profits, Minister of Finance Yuval Steinitz told a conference of the CFO Forum and Kesselman & Kesselman pwc Israel today.
"Over the past week, we received a lot of disinformation and ignorance about the trapped dividends law, which the Knesset passed this week by a large majority. For 20 years, we collected pennies from the trapped profits, and no one made a peep. When I decided to collect billions of shekels to prevent burdening the public and the business sector, the opposition woke up with a disinformation campaign that we were forgiving companies," said Steinitz.
The Knesset plenum passed the trapped profits bill on Monday in a 36:21 vote, out of 120 MKs.
Steinitz went on to assert that the government did not forgive corporations on their taxes, saying that no taxes had ever been collected on the trapped profits. "What did we forgive? After all, for 10 or 20 years, we collected nothing. The purpose of the law is to collect more taxes, and I see newspaper headlines saying that we should send the companies a tax bill of NIS 20 billion. How can we send such a bill to someone who does not owe taxes? Until a company withdraws dividends, they are not liable to taxes. We believe that collecting taxes on trapped dividends will yield much more than NIS 3 billion, which we set as the threshold."
Steinitz slammed his critics from the Left, saying, "I hear politicians talking about distribution, but they have no strategy for growth. They talk about distributing the fruits of the tree, but they have no idea how to grow a tree and its fruit. I hear two friends and political colleagues [Labor Party chairwoman] MK Shelly Yachimovich and [Meretz chairwoman] MK Zehava Gal-On talk about abolishing the Law for Capital Investments. They say that there is no need to give breaks to the export sector, that it's a kind of discrimination, and everything should be uniform, and that there should not be a differential companies tax. These are populist slogans that will destroy companies and growth in Israel.
"At the same time, they talk about raising the companies tax rate to 32%. This is immediate damage to the economy, for domestic companies, but especially for export industries, which invest here even though they could operate anywhere in the world. This means investment flight from Israel and the export of companies that already operate here. This is a step that would cause unemployment and anyone who causes mass unemployment will cause terrible and awful social harm."
Published by Globes [online], Israel business news - www.globes-online.com - on November 7, 2012
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