Israel Investigates Local Activities of Tech Giants

The Israel Tax Authority is undertaking an assessment of the activity of Facebook and Google in Israel by collecting information from media companies and customers that work with the Tech Giants. The Tax Authority aims to obtain better understanding of the economic activity and operational methods of Facebook and Google in Israel.

Background: New Law on e-Commerce

In April 2016, the Israel Tax Authority introduced a new set of guidelines which addresses new ways of taxation of foreign companies that operate in Israel through e-commerce and online services (also known as the ‘digital economy’).

Investigating Local Operations

According to the report of Globes, investigators from Israeli tax office conducted meetings with clients of Google investigating the methods used by Google and Facebook to conduct local operations. Tax Office aims to obtain information to understand the economic activity and operational methods of Google and Facebook in Israel.

"Sources who met with the investigators got the impression that they were doing very thorough work, including the smallest details of how the business is being conducted in Israel," The Globes reported.

Local Teams Responsible For Activities In The Local Market

Tax Office assumed a possible higher degree of involvement in Israel than claimed by the Tech Giants, such as helping the agencies and customers to design campaigns, segments, and targets. If proven, it would mean that Facebook and Google Israeli teams are independently responsible for activities in the local market, which obliges the companies to pay higher tax in Israel.

Sources: Globes, TechEye, Mondaq - Background

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