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The Tax Authority: It is better to be a big criminal than a small self-employed person - voila! Of money


Highlights: The Tax Authority: It is better to be a big criminal than a small self-employed person - voila! Of money. The problem: the big money is hidden in fictitious invoices, in cash and especially in the pockets of the linked people. The State Comptroller, for example, spared no harsh words from the Authority, from the data collection phase, through the synchronization between them. The small number of lawsuits that are filed in view of black capital estimated at tens of billions every year is a drop in the sea of ​​black capital.

If you are a small self-employed person or belong to minorities, there is a reasonable chance that you will be forced to pay a ransom to the tax authorities. The problem: the big money is hidden in fictitious invoices, in cash and especially in the pockets of the linked

Smuggling 6 tons of tobacco in artificial pebbles.

September 18, 2023/Tax Authority Spokesperson

The Israel Tax Authority.

The auditor's report was clear - and the ransom list that the PA forged is further reinforcement of the fact that in Israel it is better to be a big criminal than a small independent/official website, Eyal Yitzhar, Globes

The Tax Authority published the extortion decisions made in 2022. The first thought that creeps into the heart, when you remember that that year is the only one since 2009, in which an alternative government to that of Netanyahu was in office, is that no matter what government is in office here, Israel is a paradise for tax evaders.

Sorry, correction: it's a paradise for tax evaders, provided you're rich.

Before we move on to the report and what can be learned from it, there will be those who will mention that the tax authority is not the only place where the rich enjoy a special status, the chance of a well-off criminal defendant, who has the ability to buy the best legal defense, to come out legally (or at least liable) is greater The parable of those who had to rely on the public defender's office.

The same is true for those who urgently need the opinion of a specialist doctor, for a test for which the wait is long, for an expensive medicine that is not included in the medicine basket, and more.

As Groucho Marx said: "I have been rich, I have been poor, and I have learned that it is better to be rich."

Well, it may be frustrating, but that's not what the fuss was about.

Because the tax authority's role is to collect real tax from every citizen, and when the suspicion arises that a person has legally evaded paying his taxes, even to investigate - and if necessary to exhaust the law with him, either at the legal level (by transferring the material to the prosecutor's office for the purpose of filing an indictment) or at the administrative level, in the form of a fine.

Small independent?

You are targeted by the Tax Authority/ShutterStock

A drop in the sea of ​​black capital

Is the tax authority performing its role correctly?

Depends on who you ask.

The State Comptroller, for example, spared no harsh words from the Authority, from the data collection phase, through the synchronization between them - to the small number of lawsuits that are filed in view of black capital estimated at tens of billions every year.

Indeed, a perusal of the Authority's report on the cases in which a ransom decision was given in the case of those suspected of committing tax offenses, only strengthens the suspicion that those who suffer the punishment are rakke fish, small and medium self-employed, who were tempted to cut corners in the name of greed (sometimes also in the name of survival) and became criminals.

One can of course argue that a penny is worth a hundred.

This is true, but the feeling that emerges from the report is that there is only a penny - because the owner of the hundred (in the case before us, the one who owes a hundred) will escape punishment, while his poor friend will be forced to pay to the last shekel.

If we translate the report into a slightly less flattering language, while the restaurant owner, who even so barely manages to keep the tip of his nose up and forgot to print the sale of a can of Coke, may pay dearly.

The same applies to the daycare operator in her private apartment, the shutter installer, the owner of the small printing house or the person who rented a two-room apartment to finance the mortgage she pays on the three-room apartment where she lives.

If you are a big businessman, the chances of successfully evading tax are greater than a small business owner/ShutterStock

Where is the big money?

It is important to note that all of these are also required to pay tax by law, but even if we add up their entire business cycle together, we will find that it is the small money: their tax evasions will perhaps add up to hundreds of thousands of shekels, while good tax planning is protected by an army of lawyers and accountants in Retainer , can clear hundreds of millions.

For example, a construction company registered in the British Virgin Islands (BVI), a company that donates generously to a non-profit organization where the owner's wife serves as a salaried CEO, or one that won a major government tender and chained its expenses on to companies whose shares belong to the children's unregistered spouses... There are many ways to circumvent the large amount of money that must, according to the law, be paid as taxes - and the major tax offenders are confident that they will succeed in exhausting the Authority's investigators until, in the worst case (from the point of view of the debtors), the matter is closed in a compromise.

On the other hand, with small business owners, the way is much simpler : "Did you forget" (with quotation marks, but sometimes also without them) to legally issue a tax invoice? Even if it is a one-time case, the authority will claim that this is a method, determine an assessment according to its best judgment (taking into account what it believes was the real business cycle) and then offer Go pay or go to trial, while she is holding the weapon of the possessor: while those who are suspected of being liable will bleed out of their pocket for court fees and attorneys' fees, the legal authorities have enough means to manage the case for years.

So that things are not misunderstood, we will make it clear again that any income must pay real tax, and those who knowingly raise it, harm not only the tax authority, but also the citizens of Israel in general, whose level of services provided by the state will inevitably be compromised (from security and internal security, through the quantity and quality of teachers in schools to the time spent waiting for passport renewal at the Ministry of the Interior).

"Dogwalker" in Tel Aviv.

Good chances of getting caught (those photographed have no relation to the article)/ShutterStock

Between Rakek fish and celebs

However, a review of the list published today by the Tax Authority shows that its investigators are looking for the shekel of all of us under the lamp: here and there you will find among the ransom payers also a law firm (for example) or owners of medium-sized companies, but in most cases these are junior criminals, those who were afraid of the expenses involved in conducting a trial - and preferred End the dispute by paying a ransom.

Big fish are almost never caught in the PA's network, however, big names actually are: if you are a Mediterranean singer who performs three times a night, 364 days a year, or if you are the mother and business manager of an international model - there is a situation where not only will you be held accountable, but They will not even want to close the dispute by paying a ransom and go to a public legal process, which provides free advertising in prime time and for years.

On the other hand, if you are "just" a capitalist between the government and the underworld, your chances of dealing with the drops are great, almost certain.

There will be those who claim that the role of the tax authority is to bring as much as possible into the state coffers and not to pursue debtors.

Let's assume that this approach that (seemingly) sanctifies practice on top of morality, is correct.

The problem is that the way it is carried out in Israel, it does not even meet the test of the result: as we have already said, only a small (not to say tiny) part of the black capital is indeed caught and taxed.

Cabinet meeting to approve the budget.

A government with close to 40 ministers that distributes money to non-productive sectors will find it difficult to demand the payment of real taxes from the citizens/Government Press Office, Haim Tzach

what can we do?

If this is the case, maybe it's time to prioritize the conviction over the collection?

After all, an electrician or a plumber who raises a tax and hears that his neighbor has been caught, will mainly think about how to be more careful next time, so as not to be caught.

On the other hand, imagine that there was a minimum sentence of one year in prison for tax offenses (which today end in ransom), what would that electrician or plumber think to himself (and apologies in advance to those in these important professions for being chosen to be used as an example)?

There are countries where this is exactly what happens: business owners (and even big businessmen!) are more afraid of the IRS investigator digging through their binders than they are of the police detective, who will find the drawer with the prohibited substances, but in Israel it seems we have adapted to the manners of the expatriate.

Perhaps this is why there are so many cases of tax fraud among sectors that have an ongoing conflict with it (such as in the Arab and ultra-Orthodox sectors).

By the way, the number of Arab citizens in the report stands out negatively, perhaps because they are less connected to political figures such as charity fund owners who are the main beneficiaries of receiving it without a receipt.

Punishing a minimum of actual imprisonment for tax offenses can be a certain solution (if you want not to turn everyone who made a mistake in good faith into a criminal, you can certainly suffice for the first time with a warning).

A much better solution could be reducing the use of cash: while among serious tax offenders (who are sometimes also serious criminal offenders) the main means of evading tax is fictitious invoices, for the private kindergarten teacher, the owner of the explosion, the carpenter and the apartment renter, one of the popular means of offense is payment in cash, which is not Not registered anywhere.

By the way of the sectors mentioned above, they are always at the head of those opposing the tightening of restrictions on the use of cash.

This is the place to add what should be clear in reformed countries: real tax collection must also be combined with reducing government expenditures, since it is difficult to preach morality to citizens who work hard and embezzle a few shekels here and there, while running a government with 36 ministers that grants exorbitant budgetary benefits to pressure groups, a large part of which are not productive.

Until something like this happens, the people of Israel will review the extortion reports of the Tax Authority and realize that the chances of the owner of the pizzeria and even the dog walker, who posts his phone number on the electricity pole in the neighborhood - to receive an unpleasant visit from the investigators of the Tax Authority, are much higher than those of those who accumulate assets , and at least in the tax matter, not really much of a concern either.

  • More on the same topic:

  • Income Tax

  • Internal Revenue Service

  • Taxes Authority

  • heretic

Source: walla

All business articles on 2024-02-25

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