Dealing with the corona economic crisis – update

BACK-TO-WORK JOB GRANTS

The Israeli government published a draft bill on June 1 proposing to pay job grants to employers who take on new employees or take back employees who were furloughed.

HOW MUCH IS PROPOSED?

Monthly grants would be available for the period June to September 2020.

For each additional employee in May 2020 (new or taken back) over and above the work force number in April 2020, the monthly grant would be NIS 875.

For each additional employee in June-September 2020 (new or taken back by the 15th of the relevant month) over and above the work force number in May 2020, the monthly grant would be NIS 1,875.

OTHER CONDITIONS IN THE PROPOSALS

Additional employees (new or taken back) must be Israeli residents earning more than NIS 3,300 per month, and are taxed at source as usual. In the case of employees in minimum wage adapted for disability, they should earn at least NIS 1,875.

The employee has to be aged over 18 and meet one of the following criteria: (1) registered at the Employment Bureau as seeking work in the months January-February, 2020 and without work from the registration date to April 30, 2020; or (2) dismissed or furloughed in the months March-April 2020 and registered at the Employment Service (or otherwise convinces the Employment Service that he was dismissed or furloughed); or (3) the employee is entitled to unemployment pay for May, 2020; or (4) aged over 67 and entitled to “adaptation grants”; or (5) entitled to income supplement.

Ineligible employees include: the anyone related to the employer or its major shareholders if a company; members of cooperative societies; or the subject of other job grants. The employer had to be registered with the Israeli Tax Authority by February 28, 2020 and must keep proper books.

If an employee has more than one employer, only the main employer paying the highest salary may get the grant.

The grants are not subject to VAT, but are apparently subject to income tax or company tax.

PROCEDURE

These grants must be requested within 60 days after the end of the relevant month.

The grant application procedure would be operated online by the Israeli Tax Authority. Grants will be paid by bank transfer – no time-frame is stated. Any negative decision may be appealed to a tribunal and thereafter to the administrative affairs court. Any excess grant is refundable within 90 days with interest.

COMMENTS

These are not emergency regulations, Knesset approval is also needed. The Knesset will need to consider widespread criticism that the bill favors employers who laid off employees, and gives nothing to employers who avoided laying off employees. It remains to be seen what is finally passed.

It also seems part time workers count as one employee like any other.

Readers should review earlier articles on revenue decrease grants and overhead expense grants for businesses and company owners.

FURLOUGHED IDF RESERVISTS

The National Insurance Institute has finally announced a procedure for paying reserve compensation to IDF reservists who were laid off (see: https://www.btl.gov.il/ About/news/Pages/miloeim-korona.aspx). This compensation may be more than unemployment pay (100% of average salary), in which case unemployment pay already received should be topped up by the National Insurance Institute.

STATE SUPPORT FOR INSTITUTIONAL INVESTMENT IN HI-TECH

The Israeli Finance Ministry announced it will start extending guarantees to institutional investors that invest in Israeli hi-tech companies. (https://www.gov.il/ he/departments/news/press_26052020_b) . The guarantees would be 40% of approved investments to protect against a reduction in their value. There will be a price to pay – 10% of the return on the portfolio minus the return on government bonds.

PURPLE STANDARD

The coronavirus hygiene rules for business, known as the purple standard, have been adjusted many times, most recently on May 27. Essential sectors, industry and service businesses with under 10 employees or under 30% of their workforce at the workplace may receive any number of clients but must observe certain basic conditions. Briefly, these are: (1) Pre-entry inquiry about any coughing, temperature above 38° or having met any coronavirus patient in the last 2 weeks, (2) check their temperature is below 38°, (3) two meters apart, (4) separate or sanitized equipment for each employee, (5) instruct employees about hygiene especially washing hands, (6) up to 2 persons per elevator or half the permitted number if there are over 5 floors, (7) same employees in each shift if possible (8) everyone wears a mask. Additional rules apply in other businesses and certain sectors.

As always, be careful and consult experienced advisers at an early stage in specific cases.

leon@h2cat.com

The writer is a certified public accountant and tax specialist at Harris Horoviz Consulting & Tax Ltd.