Itongadol.- Finance Minister Yair Lapid on Wednesday appointed a committee to examine The Law for the Encouragement of Capital Investment, which offers companies tax breaks for making big investments in Israel.
The law has been at the center of a heated debate this week, as the Israel Tax Authority convinced big companies such as Teva, Israel Chemicals and Check Point to distribute “trapped profits” for a reduced tax bill totaling NIS 4.3 billion. The companies, which have paid extraordinarily low marginal tax rates due to their investments, had kept their profits “trapped” because of provisions in the law that they feared would lead to high tax bills.
“We will work to fix the capital investments law, to fit it to the needs of the citizens of Israel and to balance it with the needs of the companies,” Lapid said.
Lower tax rates invite multinational companies to build plants in Israel instead of competing nations such as Ireland, provide good jobs and spur economic growth, Lapid has argued.
His critics say it is unfair for large companies to pay minimal taxes while small and medium-sized businesses pay the full corporate tax rate. They question whether the money could be better spent in other, more equitable ways.