Israel News for April 27, 2017
Trump Tax and Israel
US President Trump revealed a new tax plan that proposes to reduce corporate taxes from 35% to 15%. That’ll be great for US companies, but potentially not so great for Israel. Many Israeli startups that do most of their their business in the US may decide to incorporate in the US to take advantage of the favorable tax rate.
According to Jonathan Irom, a partner at the International and High Tech Department at the GKH law firm in Tel Aviv, “If the corporate tax rate in the US will be cut to 15% as proposed by Trump, this will put a lot of pressure on Israeli startups to succumb to investors’ demands and incorporate in the US.”
He explained, “Up until now the US tax rate was higher than in Israel — an average US rate of 35% compared to the Israeli rate of up to 25%. Israeli entrepreneurs have been able to use the lower tax rate as an excuse to incorporate here in Israel. But once the rate is cut in the US that excuse will no longer be valid, and this will drive a lot of startups to seriously consider incorporating in the US rather than in Israel. That means less foreign investment in Israel, less companies in Israel that are paying taxes locally and lower revenues from M&A deals under certain structures.”
Israel also stands to lose a significant amount of tax revenue from companies like Apple and Google who have recognized income in Israel because of lower tax rates. With the drop in US rates the companies will move their profits back to the US, which is exactly what Trump wants.
The Israeli government is working on a new plan to significantly lower corporate taxes. But will it be good enough to compete against the Trump tax cuts?
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Trump Visit
President Trump is expected to visit Israel next month, and he won’t be coming alone. US Ambassador to the UN Nikki Haley and Secretary of State Rex Tillerson, as well as US Ambassador David Friedman and Jared and Ivanka, will accompany the president on his visit.
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Another UNESCO Vote
The United Nations Educational, Scientific and Cultural Organization (UNESCO) is set to vote on Tuesday, Israel’s Independence Day, on a resolution against Israeli sovereignty over Jerusalem. Despite efforts by the Israeli Foreign Ministry to convince countries to vote against it, the resolution is expected to pass. The US administration is also working to pressure UNESCO and the member nations to postpone the vote or to oppose it.
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Gaza Skirmish
Israeli troops patrolling near the Gaza border cam under fire yesterday from Gaza. None of the soldiers were hit or injured. Shortly after, in response, an IDF tank destroyed a Hamas position in Deir al-Balah, in central Gaza. Although no terrorist group claimed responsibility for the attack against the soldiers, Israel holds Hamas responsibility for all military activity within Gaza.
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Cyber Attack Foiled
The National Cyber Authority (NCA) announced that it recently blocked a massive cyber attack on Israeli businesses and infrastructure. According to the authority, the attacker posed online as a legitimate organization, sending emails in the name of that organization while simultaneously trying to attack about 210 other organizations, government ministries, public bodies, and private individuals.
In response to the attack, the NCA said it will publish instructions for individuals, businesses, and government ministries to protect themselves against technology attacks.
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NBA in Israel
The NBA is preparing to head to Israel this summer to run its Basketball Without Borders program. The camp will take place from Aug. 13-16 in Netanya. The top teenagers from over 30 countries, including Israel, Spain, Germany and France, will get coaching and tutoring from NBA and FIBA players, coaches and former stars, including former Spurs All-Star David Robinson. The teens will also perform community outreach in Jerusalem and Tel Aviv.
Kathy Behrens, NBA president of social responsibility and player programs, said, “We’re looking forward to the chance to bring all communities together for this program. This is going to be about bringing the Jewish, Christian, Muslim, Druze and other communities together.”
Regarding Israel she said, “It’s a country that loves basketball. I think they will be a great host. It has an extraordinarily rich history. So I think the people who are going to be at the camp participating will learn a lot and certainly appreciate that aspect of it.”
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