Now this is something that none of us really likes doing: trying to get a tax refund, never mind what for. It’s a headache, costs a bundle (for hiring an accountant), takes time, and so on and so forth. Even though, by law, we are eligible to demand tax refunds, most of us simply don’t bother.
This is where Finupp Ltd. comes in: it allows every employee or self-employed person to obtain a tax refund in a simple and user-friendly way, and, just as important, far more cheaply than current options. Finupp, founded in January 2015, has six employees. It was founded by CEO Asaf Regev, CTO Dani Silberstein, and VP marketing Lior Albeck, and has raised $20,000 to date, mostly from friends and relatives.
“It is precisely because I am a lawyer and accountant with tax expertise I understood that tax refund services are not accessible to everyone,” says Regev. “I decided to automate the process and linked up with Dani and Lior,” he adds in explaining the founding of the company.
Finupp has developed a cloud-based solution (not an app) for the management financial and accounting data. The company currently focuses on helping obtain tax refunds, but may later expand to other financial niches in our daily lives. The solution uses an accounting algorithm. “We basically took every item in the Income Tax Order and turned into computer code,” says Regev, adding a bit of trivia. “Do you know why it is called the Income Tax Order, and not a law? Because everything that started before 1948, the year of independence, was called that because of the British Mandate government.”
Finupp has basically developed a robo tax advisory platform, which as soon as the client authorizes it, examines the transactions in his bank account and provides regular advice with some degree of optimization. For example, at the end of the year, is the client eligible to a tax refund on losses in certain transactions against other income; is it worthwhile to sell stocks at a loss near the end of the year; should income be deferred to the following year, or should expenses be brought forward; and so on.
Albeck says that, currently, Finupp is focusing on tax refunds on mortgage insurance and life insurance. “Many people are unaware that they can receive a tax refund on these parallel expenses. In general, there are a great many rights that people are unaware of. Our solution can help every person, whether an employee or self-employed, obtain a tax refund.”
Albeck lists other common reasons for tax refunds: non-continuous employment (change of jobs, unemployment, maternity leave), which can result in overpayment of income tax and therefore creating eligibility for a tax refund; for investors in the capital market, Finupp’s algorithm improves tax payments and capital market losses over the six preceding years, as permitted by law; mortgage holders who also have life insurance; credit points that are often not utilized, creating eligibility for a tax refund; discharged IDF soldiers, people with an academic degree or vocational certificate, mothers and fathers with children born after 2012, residents of border towns, new immigrants, etc.; and optimizing payments to provident funds by a couple who are both employees.
Regev says that the robo tax advisory is needed “because alternatives in the market cost time and money. Opening a file at an accountant, even if he agrees to do so, which is not always the case unless large amounts of money is involved, can cost at least NIS 300 for each refund. This does not include refund-based commissions of 20-35% that they charge.”
With Finupp, it is only necessary to connect to the platform from any device, check the tax refund eligibility which is free and only if the user decided to file a tax refund application through Finupp, will it charge NIS 195 per application. “There is no difference between our calculation and the Income Tax Authority’s calculation, because Finupp copies the income tax formula,” says Regev.
To date, Finupp has helped 11,000 people obtain more than NIS 1 million in tax refunds. “The average refund per user is a few thousand shekels,” says Albeck.
Regev and Albeck say that, after Israel, Finupp will try to gain a foothold in other locations, such as the UK, India, Australia and Africa. “The common denominator is that they have the same income tax order, i.e. a British order - in other words every country that was once part of the British Empire,” says Regev. Albeck adds that the American market is much less relevant for the company because of mandatory annual personal filing, and because there are already many US companies that offer a service similar to that of Finupp.
“The financial world is undergoing a revolution, and Finupp is joining the revolution at precisely the right place adding value to the masses who are currently outside the game,” says Moneta Seeds managing partner Adoram Gaash, who is mentoring Finupp. “Its founders realized that, just in Israel, there are billions of shekels outside the game, which should be brought back in by law to the toiling masses, but which is not returned because there is no demand or smart planning. This is just the beginning, because the moment the clients’ account data are at Finupp, optimization engines will offer much more than just tax refunds. Think about recommendations for provident funds, mortgages, interest, savings, and whatnot. In the modern fintech world, there is no reason why any ordinary person should go to his bank branch and ask the adviser what should be done with the little money he has in his savings accounts and funds, and get trivial answers that do not better his position.”
Published by Globes [online], Israel business news - www.globes-online.com - on November 5, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015