TMA 38: The tax benefits are the ones that most often create the economic viability for promoting the projects (Photo: Shlomi Gabai)
The Finance Committee yesterday (Wednesday) approved the extension of the tax benefits in TMA 38 until May 2026, thus
paving the way for their approval by the Knesset in the second and third readings - this, after the government announced last month its intention to advance the granting of the benefits in an accelerated procedure.
The validity of which has been extended are: a reduction of the appreciation tax on the consideration that the tenants of a building that passes TMA 38 receive from the developer;
Exemption from VAT on construction services and postponement of sales tax and purchase tax payments.
We will remind you that, after the tax benefits in TMA 38 transactions expired at the end of December 2021 and there was uncertainty among many entrepreneurs, who continued to manage TMA 38 projects during This period, without the assurance that they are indeed worthwhile from an economic point of view.
Also, this decision also signals to the market that TAMA 38 is still here and will not disappear soon, after many question marks have arisen regarding the actual implementation of the plan, which according to many has moved away from its original purpose, and is a reinforcement Existing buildings against earthquakes.
Moved to second and third reading: extension of tax benefits on TAMA 38 until 2026 (Photo: Reuven Castro)
Since the benefits expired in December 2021, as mentioned, several attempts were made to extend the benefits through legislation, but due to the replacement of the Knesset, the validity of the benefits was not extended and created feelings of uncertainty around the issue, which hurt entrepreneurs, who continued to sign new deals knowing that if the tax benefits were not extended , the full tax will be paid by them.
These are sometimes high amounts that make the projects unprofitable.
In addition, the Tax Authority published a decision in August 2022 that allowed tenants and entrepreneurs to sign agreements to carry out transactions pursuant to TAMA 38, and to be content in the initial stage with submitting a notice of the execution of the transaction, without submitting a statement requiring the payment of appreciation tax and purchase tax. Since the decision was valid until October 2023
, It was only an interim solution, which only increased the lack of acknowledgment among the entrepreneurs, who today, after the government fulfilled its statement from last month, can be much more relaxed.
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