Federation of Israeli Chambers of Commerce president Uriel Lynn says it is urgent to gradually reduce Israel's corporate over three years to a competitive 25%.
Lynn said that Israel lags behind corporate tax developments in Europe. Israel continues to levy a corporate tax rate of 34%, while the average rate in the EU is 24%. In nine of the new EU members, Malta excepted, the corporate tax rate is 16% today, compared with 20% at the beginning of 2004.
The average corporate tax rate in the EU fell from 26% at the beginning of 2004 to 24% at the beginning of 2005. The downward trend in the tax rates began when ten European and Mediterranean countries joined the EU in 2004. The corporate tax rate in some of the new members was less than 20% at the beginning of 2004.
The Chambers of Commerce notes that the new EU members still have the characteristics of developing countries, so even without low corporate tax rates they attract foreign investment.
The average salary in eight of the new EU members, Malta and Cyprus excepted, was €440 (NIS 2,200) in 2003, compared with € 1,400 (NIS 6,964) in Israel..
The Chambers of Commerce survey also notes that Ireland levies a corporate tax rate of 12.5%, achieving impressive growth, and it is not surprising that it has become a focus of attraction. Foreign direct investment in Ireland has totaled $85 billion over the past four years.
Published by Globes [online], Israel business news - www.globes.co.il - on March 28, 2005