Israel plans to enact global minimum tax of 15% on multinational corporates
Israel will be joining 140 countries in collecting a minimum tax from global tech giants such as Intel, Google, and Microsoft, which have been benefiting from reduced rates
Israel is planning to advance legislation to collect a global minimum tax rate from multinational corporations, that is being adopted by 140 countries around the world to stamp out loopholes or tax outflow to low-tax jurisdictions.
The Finance Ministry announced on Sunday that Israel decided to put in place a global minimum income tax rate of 15 percent, a so-called Qualified Domestic Minimum Top-Up Tax (QDMTT), starting in 2026 on the profits generated by multinational companies with annual global revenue in excess of €750 million ($812 million). It is intended to prevent global large tech groups resident in Israel from paying taxes abroad for income generated in Israel.
With this announcement, Israel would be joining about 140 countries that already agreed in 2021 to changes of how large multinational corporates are taxed in order to deter them from avoiding taxes by parking their profits in countries with lower rates. The initiative, which was also created to deal with the challenges of digitalization and the e-commerce economy, is tailored to make sure large tech groups and multinationals pay a global minimum tax rate in the place they do business.
“Israel’s decision for the implementation of the international standard that was formed regarding the taxation of multinational corporations, will help preserve the attractiveness of the Israeli tax regime in the new global taxation reality, and will prevent an outflow of taxes from Israel generated from local operations,” said Finance Minister Bezalel Smotrich. “Compliance with advanced international standards is a necessary condition for creating a free and global market economy that leads to growth and improving our quality of life.”
Smotrich added that the decision was made on the recommendation of Shmuel Abramzon, the ministry’s chief economist who is in charge of state revenues; Yogev Gradus, head of the budget division; and Shai Aharonovitz, director of the Israel Tax Authority. The legislation still needs to be drafted and then passed in the Knesset.
The global tax reform program that Israel is planning to join is part of the Base Erosion and Profit Shifting (BEPS) initiative brokered by the Paris-based Organization for Cooperation and Economic Development (OECD). Many of the countries that have joined the initiative have already started to adopt and implement the minimum corporate tax from 2024.
https://www.timesofisrael.com/israel-plans-to-enact-global-minimum-tax-of-15-on-multinational-corporates/