The District Court in Tel Aviv ruled today (Tuesday) that Akum must pay tax for its income - a step that could harm the royalties the artists receive.
Akum" (Association of Composers, Authors and Publishers in Israel) is an association for the joint management of copyrights, which works to protect the rights of the authors of music and literature. Its main goals are the joint management and enforcement of copyrights, and the collection of royalties for the use of these rights, and the transfer of the royalties to the authors, after covering her expenses.
The amount of royalties collected by Akoum every year is very large and reaches hundreds of millions per year, and throughout all the years of its existence, the association did not report the royalties it received as income belonging to it, and the starting point was that it was the funds of the creators. It should be noted that over the years things were done with Akoum taxation arrangements within which it was not charged corporate tax.
However, it turns out that the amount of money that goes into Akom's coffers - even after reducing the expenses of its operating mechanism - exceeds the amount of money that goes out to the creators.
Against this background, the Tax Authority argued that in view of the accumulated funds in Akom's coffers - and in particular in view of the fact that Akom is the owner of the copyrights, starting from 2012 the income received by Akom should be considered taxable. On the other hand, Akom claimed Because its traditional reporting method is the correct one, since it is not the owner of the income, and the right to royalties belongs to the creators, who are the shareholders in the company, and it only serves as a conduit for their collection.
The Honorable Judge Hari Kirsh of the District Court in Tel Aviv rejected in his ruling Akom's claims of being only a conduit for collecting and transferring the funds to the creators, and reiterated the well-known rule: "The owner of the tree is the owner of the fruit".
In response, AKOM stated: "AKOM has received the verdict and is studying it."
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