Institute of Tax Advisors: 65% of employers absorb the value of Passover gift certificates and the tax on them, so that employees' net pay is not affected.
Most Israeli employers absorb the cost of Passover gift certificates, adding the value of gift certificates to employees' salaries, and the tax paid on the certificates, so that employees' net pay is not affected, according to a nationwide study by the Institute of Tax Advisors in Israel of 450 large, medium-sized and small employers.
The study found that 65% of employers absorb the value of Passover gift certificates and the tax on them. 25% of employers include the value of gift certificates in employees' salaries, and the gift certificate is taxed. 10% of employers do not give out gift certificates for both Passover and Rosh Hashana, doing so only once a year, on one or the other of these holidays.
"Income tax regulations stipulate that salaried income is any benefit or allocation given to an employee by his employer, either in cash or cash equivalent, either directly or indirectly," said Institute of Tax Advisors president Yaakov Virzbinsky. He said that when an employer gives employees gift certificates he is in effect giving them a benefit that the income tax authorities consider as salary for all intents and purposes.
Published by Globes [online], Israel business news - www.globes.co.il - on April 19, 2005