Report: Israel prepares to send tax bills to Facebook, Google

Israel is planning to send tax bills within a year to Internet companies Google and Facebook, financial newspaper TheMarker reported on Wednesday, joining efforts by several countries, including the European Union, to get the Internet giants to pay more tax.

TheMarker cited Israel Tax Authority chairman Moshe Asher as saying work on preparing tax bills had already begun. The authority is now working on figuring out how to make its calculations.

It will have to decide what percentage of the companies’ profits from their Israeli customers should be taxable in Israel.

“Ultimately, taxes can be charged based on their operations in Israel,” Asher told TheMarker. “Our goal is to obtain as much data as we can, even if many of these figures are held outside of Israel. Within a year we’ll issue these companies tax bills.”

The new Israeli policy would come amid a push by the Organization for Economic Cooperation and Development to cut down on international tax-avoidance strategies. The EU has threatened to move ahead alone with a tax on Internet companies’ turnover. Asher said the OECD was appointing an inspection committee.

“We believe in the process, and ultimately we’ll be able to issue justified tax bills, even if we’re among the first in the world,” he said.

Israel’s corporate tax rate is 24% of profits, with taxes based on whether companies are considered to have a permanent presence in Israel. However, companies may receive tax breaks for making significant capital investments.

In August 2016, the European Commission ordered Apple to pay Ireland €13 billion ($15.4b.) in taxes.