Minister of Finance Bezalel Smotrich opposes reported proposals by the special team formulating reform of taxation in the technology industry to raise the rate of tax on employee options.
The proposal is that employees who do not exercise options at the end of the vesting period will pay 30% tax on the sale of shares when options are exercised at a later date, and will not enjoy the reduced tax rate of 25% on options currently stipulated by law.
"The attempt to raise the tax burden on the high-tech sector is a bad idea and I believe that it’s a mistake that will harm the economy and ultimately every citizen," Smotrich wrote. "Technology workers are part of the main engine of the country, and furthermore there is no need to hike taxes. Insofar as adjustments and changes are required in state revenues, there are ways of doing this. This way is not correct, and as long as I am minister of finance that is my position and that is what I will promote. From enquiries with the professionals at the Ministry of Finance, it emerges that they certainly tend towards my position on the report that was published."
Smotrich was even reported to have "vetoed" the proposals, but the recommendations of the team on technology industry taxation were not meant to be published before the election on October 27, and certainly not to be drafted as legislation in the two weeks remaining for Smotrich as minister of finance. Smotrich may or may not be a minister in the next government, but even if he is, he won’t necessarily hold the finance portfolio. His "veto" therefore has no operative significance at present.
Even without Smotrich’s opposition, however, the plan for taxing options is liable to meet obstacles. The technology industry has been in uproar over them, and claims have arisen that raising the tax on options that are not exercised quickly will severely harm companies and workers in the industry, who in any case are leaving the country en masse.
"Taxation of options in Israel is a complicated subject, currently governed by two sections of the Tax Ordinance, a number of regulations dealing with technical matters, a collection of unofficial professional guidelines, and a great deal of ‘oral law’," says Adv. Doron Mutai of law firm Pearl Cohen. "The main question is, what is the aim of the current proposal? If the idea is to find a way of collecting more tax from the working and contributing segment of the Israeli public, then, apart from the problematic aim, it’s a double-edged sword that is liable to damage the engine of the economy instead of making it move more easily."
Published by Globes, Israel business news - en.globes.co.il - on October 12, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.