Israel's rate of VAT is to fall to 17% and the Companies Tax rate is to fall to 25%, Prime Minister Benjamin Netanyahu announced this evening at a joint press conference with Minister of Finance Moshe Kahlon.
"In order to encourage growth, I have decided together with Minister of Finance Moshe Kahlon to reduce taxes, to cut VAT to 17% and Companies Tax to 25%," Netanyahu said, adding that he believed that this measure would contribute to economic growth.
Kahlon explained that the decision stemmed from surplus tax receipts amounting to billions of shekels, "which we intend to return to Israel's citizens."
Kahlon added, "If there are further surpluses, we intend to continue the trend of tax reductions. But if we find ourselves in a slowdown or a significant fall in tax receipts, we will have to make a correction, and this correction will be accompanied by complementary measures to restore the situation to where it was."
Sources inform "Globes" that state tax revenues in August, which have not yet been officially released, were NIS 2.5 billion higher than forecast, a figure than amazed top economic officials. The cumulative surplus is close to NIS 10 billion, although at this stage the Ministry of Finance does not intend to revise its conservative revenue forecasts for 2015 and 2016 in the state budget that will be voted on at first reading this evening. The tax figures have led Kahlon to query the Central Bureau of Statistics showing a slowdown in the Israeli economy in the second quarter.
Published by Globes [online], Israel business news - www.globes-online.com - on September 3, 2015
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