Upon taking office, the new director of the Tax Authority, Shai Aharonovitch, whose appointment was announced this week, faces quite a few challenges. With the full backing of Finance Minister Bezalel Smotrich, Aharonovitch has all the tools to lead the necessary change in the Authority, for the benefit of all those involved in the industry. These are the main challenges he will have to address during his term.
Recruitment and retention of personnel
In recent years, there has been a steady decline in recruitment of personnel to the Tax Authority, whether accountants, lawyers or supervisors. In the accounting industry, there has been a significant decline in the number of enrollees in studies in recent years, and together with wage gaps between the public and private sectors, many employees in the Tax Authority prefer to move to the private sector, which offers better wages and conditions. In recent months, we have witnessed strikes and sanctions among Tax Authority employees, and it seems that another challenge is also to "keep the dirty laundry inside the house," so that as little of the bitterness and difficulties experienced by the Tax Authority employees will reach the general public's consciousness.
Deficit and empty coffers
Against the background of the economic challenges in the country in recent months, the abandonment of employees and companies abroad, and a decline in investments in companies in Israel in general and in the high-tech industry in particular, the Tax Authority's coffers are also dwindling. On the one hand, raising taxes in order to increase tax payments is an unrealistic step that is liable to further exacerbate the economic stagnation, and on the other hand, total tax payments continue to decline. The solution in this case will have to be creative.
An idea being tested in this context is to revive a voluntary disclosure process for unreported income and assets outside of Israel, with opinions on the effectiveness of this solution divided. Raising taxes is also on the agenda.
Legislative stalemate
For several years, the Tax Authority has not advanced significant reforms and changes in tax legislation, and in many cases tax legislation in Israel has lagged behind the pace of international business. In the field of crypto and digital currencies, Israel has not renewed tax legislation that will allow easy business operations, and therefore many business owners are leaving Israel. In the field of international taxation, the Authority has been trying for several months to promote legislative changes that will clarify and facilitate decisions regarding residency for a person's tax purposes, but official legislation has not yet been implemented in this case. In general, it can be said that tax legislation in Israel is stuck, leading to many Israelis carrying out business activities in countries outside of Israel.
Photo: GettyImages,
Making the systems accessible to the public, socially and technologically
The Tax Authority is perceived today as a body that the private citizen does not want to deal with out of fear and fear. In many cases, this concern leads to huge sums that the Tax Authority holds for overpayments of tax payments by people who are entitled to a tax refund, but do not request it due to lack of awareness or fear of contacting the Tax Authority. This deepens the gap between the Tax Authority and the public. In order to narrow this gap, we have recently seen the PA being more active on social networks such as Facebook, LinkedIn and TikTok, but these gaps are so large that they can only be narrowed over years, and not quickly. Beyond social accessibility, there is a need for technological investment in order to make information accessible to the public, and to make it easier for each person from the community to independently apply for a tax refund, or any other action.
Yaniv Angel, CPA, Tax Expert, AURENIsrael
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