Aid Organization for Refugees and Asylum Seekers in Israel

Lawmakers cut debt for employers of asylum-seekers

Date: 16.5.18 Source: Jerusalem Post, Tamara Zieve

The Knesset Finance Committee and Tax Authority agreed on Tuesday to reduce by some 40% the amount owed by businesses for levies on asylum-seeking foreign workers.

The arrangement presented at a meeting convened by the Finance Committee marked a compromise between the Tax Authority and business owners on retroactive collection of the levy, interest and fines. It came after many business owners testified that they could not meet the full payments required by the authority.

A High Court of Justice ruling last September imposed a 20% surcharge, applied six years retroactively, on wages of foreign workers with temporary residence permits. Business owners complained that the additional tax would cause them heavy losses and might force them into bankruptcy.

The Tax Authority set up payment arrangements that were eventually extended until the end of May, giving a 50% discount on interest on the accumulated debts and enabling repayment in 36 installments. The arrangement now advanced by the Finance Committee gives business owners improved terms for settling their outstanding debt.

Committee chairman MK Moshe Gafni (United Torah Judaism) said after many efforts to reach an agreement, a way was found to prevent the collapse of businesses due to these debts. He thanked the Tax Authority but at the same time said he felt the law should be entirely canceled. He noted that the levy on foreign workers was introduced to encourage the hiring of Israeli workers, but it did not produce the desired results

Miri Savyon, deputy director of the Tax Authority, said the deal was reached after they realized that some employers would be unable to pay the large accumulated debts. “It is important for us to collect the tax and on the other hand to let people make a living,” Savyon said, adding that the Supreme Court had also asked the Tax Authority to reconsider the sums.

“We want to go for a broad and comprehensive outline for many businesses in order to prevent friction and to reduce the problem from the agenda. There are some businesses that have not yet reached an audit, and it’s important to know that this framework applies to everyone.”

This arrangement only applies until the end of June, after which the previous arrangement will resume.
 MKs Oded Forer of Yisrael Beytenu and Mickey Levy of Yesh Atid requested that the time limit to apply for the benefits be extended three months, arguing that one month was too brief.

According to the arrangement, the interest on the debt and fines imposed will be abolished throughout the period. Businesses with a turnover of more than NIS 20 million must pay 45% of the debt by the end of June. Businesses with a turnover of NIS 5m. to NIS 20m. must pay 30% and can do so in two installments, one at the end of June and one at the end of July. Businesses with a turnover of less than NIS 5m. must pay 15% of the debt and can also do so in two installments on the same dates.

The balance of the debt will also be spread out to 36 payments. Additionally, there will be the possibility of additional assistance for those businesses which find it difficult to repay according to the guidelines.

A request by the Finance Committee chairman to reimburse those who have already paid their debts will be examined on a specific basis, Savyon said.

MK Eitan Broshi of the Zionist Union opposed the arrangement saying, “All this money is stolen. We canceled the employers’ tax in agriculture. We agreed here that it was unjustified. Also here the tax is unjustified. Foreign workers are the ones who agree to work there. These businesses barely live. Why are taking money from them for foreign workers? They are paying them a salary. This is a country that wants to produce, which is building factories overseas. Something here went wrong. You have to erase the debts. You are not serving an increase of production.”