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A tax on the technology giant, the Israeli connection
Will setting a minimum global corporate tax rate of 15% affect Israel?
The tax breaks granted to date to technology giants have accelerated the Israeli market, but stopping them may lead to the renewed growth of new startups and even to a change in the balance of coveted jobs in Israel.
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Janet Yellen
Tut Shani, managing partner, Sharona Partners
Monday, 07 June 2021, 08:18 Updated: 09:24
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Following the G7 decision, the technology giants will have to reconsider their location in Israel as well. But will setting a minimum global corporate tax rate of 15% affect Israel?
After years of discussions, the G7 finance ministers have reached a historic agreement on reforming the global taxation system. The United States, Canada, Japan, Germany, France, Italy and the United Kingdom announced last night that they support setting a minimum global corporate tax rate of 15%, thus adopting the G7 countries' initiative of the Clinton administration.
The seven largest industrialized countries in the world intend to take steps to ensure that taxes are paid in the countries in which the corporations operate. The purpose of the breakthrough agreement is to close loopholes that have allowed some of the world's largest corporations to evade paying taxes.
For example, Liechtenstein, which despite being a tiny country and having almost no companies actually operating in it, there are many companies registered in it to be subject to lenient tax-paying laws, and thus it has actually become a tax haven.
This phenomenon means that the parent countries of the large companies do not receive the share they deserve from the company's profits, and the leading countries try to stop it.
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High-tech workers.
How will the imposition of a uniform tax on corporations affect the industry in Israel?
(Photo: ShutterStock)
Good or bad for Israel?
The question is, how will the historic agreement affect Israel, the startup Nation? For Israel is known as the start-up nation for good reason, it ranks first in the world in national expenditure on civilian R&D as a percentage of GDP, the weight of the business sector in R&D activity in Israel, about 86%, is the highest among OECD countries, and it reflects the success in the private sector.
Israel also ranks third innovation index of the World economic forum, which incorporates parameters such as quality of scientific research institutions, R & D expenditure in the business sector, partnerships between academia and industry, the supply of scientists and engineers and a number of patents relative to population size.
On the one hand, the tax breaks granted to the technology giants in Israel have accelerated the market here and its development, and have largely helped Israel obtain the title of start-up nation. On the other hand, the main difficulty that is heard again and again among young startups, which I encounter is the difficulty in recruiting quality employees. Which hinders the growth of new companies here.
Until now, programmers, developers, product people, and other technology executives have naturally been attracted to prestigious positions among the international high-tech companies based in Israel.
These companies, which have received significant tax breaks from the government, have set up huge centers here that have attracted the best workers in the market.
Following the G-7 decision, the balance may change.
Due to job cuts and the emerging initiative, international technology giants will have to reconsider their geographical location, and talents in the field will also be required to work in Israeli startups at the beginning of their careers following the expected transition.
A high-tech company in action.
The age of local entrepreneurs has risen in recent years (Photo: ShutterStock)
The presence of international corporations improves the chances of local startups
Over the past decades, more than 300 multinational corporations operating at the forefront of technology have chosen to establish research and development centers in Israel, and some even operate a number of centers in various fields.
Multinational corporations, in most cases, increase the chances of new startups in Israel to get up, grow, refuse to sell the company too soon and thus reach an impressive volume of activity. They add managerial maturity to the Israeli entrepreneur.
This is together with the fact that today, the average age of the Israeli entrepreneur is close to 40, which in recent decades has been much lower. Entrepreneurs even come with greater personal, professional and managerial maturity than before.
Sharona Partners is making great efforts to bring international companies to Israel, among other things, to bring about economic prosperity.
My perception is that as more and more Israeli and international companies establish their offices in Israel, we will succeed in expanding the circle of work in Israel and even bring about economic prosperity.
Over the years, multinational companies operating a research and development center in Israel have acquired over 100 Israeli companies and this is a trend we do not want to stop.
The article was written by Strawberry Monday, co-director of the group Sharona Partners.
Group Sharona Partners consists of four main activities:
Sharona Ventures venture capital fund that invests in startups at the seed
Sharona Spice operates a shared workspace
news website and media technology Giktiim
Akslrtor where various programs to accelerate startups
group There are dozens of workers in Israel
The author, Tut Shani, managing partner in the Sharona Partners group (Photo: PR)
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