Tech giants Google, Amazon and Facebook may soon start paying value-added and other taxes in Israel.
Many major tech companies maintain large R&D facilities in the country. While the state reaps the rewards of income taxes on the salaries they pay in Israel, other taxes, especially value-added tax on sales of products or online ad services, are not collected. The corporations’ overseas listing and the difficulty in ascertaining the geographic location of a business activity conducted online placed these companies outside the bounds of existing Israeli tax regulations.
In a document published Monday, the Tax Authority lays out new rules for taxation of overseas companies offering services to Israelis, such as the online advertisements targeting Israeli audiences on Google and Facebook.
Among the new rules: a company will be considered to have a permanent presence in Israel — and thus subject to value-added tax and other obligations — if it has an online presence targeting Israeli consumers, has representatives seeking to find Israeli customers or has a web presence tailored to the Israeli market.