Deputies blocked the initiative of the Ministry of Finance to cancel benefits for a business sector

We are talking about a mechanism that allows several interconnected companies, for example, inside corporations and concerns, to pay for VAT as a whole and avoid VAT reports on internal transactions between them.

According to the Ministry of Finance, this step was supposed to bring about 650 million shekels per year in the state of state. According to Globs, he was removed from the agenda by the chairman of the commission, Oachr Katz (Likud) after a meeting of the head of the Presidium of the Business Secret Setter Dubi Amaya with the chairman of the financial commission of Knesset Moshe Gafni (“Yaaatyata-Torah”).

This is the second attempt by the Ministry of Finance to achieve the abolition of benefits. Initially, the abolition of benefits was included in the package of measures to consolidate the state budget, but at the last moment it was excluded from it with a Knesset.

According to the Ministry of Finance, this mechanism was born during the period of hyperinflation in Israel in the 80s, in an attempt to prevent a situation in which entrepreneurs would have to wait for tax refund, the real value of which was dramatically depreciated. Today, when inflation is at a reasonable level, the initial justification for such a mechanism no longer exists.

In addition, the ministry emphasizes that the existence of entrepreneurs only in the VAT system does not allow uniformity, and as a result there are difficulties in solving general issues regarding associations of entrepreneurs in various tax systems.

A special way of reporting of entrepreneurs’ associations complicates the tax service to conduct effective reports of reports, the use of computerized control systems and ensuring the collection of real taxes.