April 2, 2020
Thank you to Caspy & Caspy C.P.A for authoring this article.
Updates and Recommendations in Interactions with the Tax Authorities and other Government Bodies during the Corona Crisis
- Taxation and Leave Without Pay (LWP)
- Inputs tax claim – It is possible to use a copy of the invoices and scans of invoices received, without an electronic signature, in order to deduct inputs for transactions effected from 1.3.2020 through 31.5.2020.
- Tax, VAT and income tax refunds – The tax authorities have instructed their offices to pay tax refunds quickly to those eligible. If you expect a refund, we will take action to speed it up.
- VAT reporting and payments for January and February 2020 – For dealers who report to VAT on a bi-monthly basis, reporting was postponed to April 27, 2020.
- Reporting and payment of prepayments of income tax and national insurance and income tax withholding tax – For dealers having cash flows difficulties in paying their obligation, it is recommended to file the reports on the required date, and arrange the payment in an agreed upon payment schedule.
- Filing date of annual tax reports for Year 2018 and Capital Declarations as of 31.12.2018 – the date was postponed to 31.5.2020.
- Withholding tax approvals and tax adjustments – Withholding tax approvals that will expire on 31.3.2020 were extended until 30.4.2020. Tax adjustments that will expire at the end of the 2019 tax year were extended until the payment date of salaries for May 2020, and not later than 13.6.2020.
- Special acclimation grant for those aged 67 and above – that are put on LWP for 30 days or were fired.
Below is a link to examine eligibility. Additional information on how to file the application for the grant will be published shortly.
- LWP for controlling shareholders – According to the National Insurance Regulations, controlling shareholders are not insured under unemployment insurance and as such are not eligible for LWP. A claim for unemployment pay to the spouse can be examined.
- Putting employees on LWP – Non-essential workers can be put on Leave Without Pay in order to lessen the burden of salary payments. In order to put workers on LWP, they must be furnished with an LWP form, which explains what it means, plus the starting date of the LWP and the date the LWP is expected to end. Form 1514 is also to be attached – “Employers’ Certification of Employment Period and Salary”.
Employees should be instructed to take action as follows:
- Registration on the Employment Service’s website – Registration is done online. Anyone who registered by 31.3.2020 will be considered eligible for unemployment pay as from 15.3.2020.
Without such registration – the employee is not considered unemployed and is not eligible for unemployment pay.
The link for registration on the website:
- Filing a claim for unemployment pay –
- The employer must transmit Form 100 from the payroll software to National Insurance.
- The employer must verify that the transmission was received.
- 2 days after the form is input, the employee must file an online claim for unemployment pay on the website of National Insurance.
The link for filing for unemployment pay –
- Grants to the Self-Employed
For someone who appears to meet the conditions for receipt of the grant, we recommend to already register, as detailed below, since this grant can be received immediately, even before an evaluation of eligibility by the Tax Authority.
Use the following link to register:
The conditions for eligibility –
- Those eligible shall be self-employed persons above age 20 (who attained the age of 20 in the 2019 fiscal year).
- Income test: The text includes income from all sources, including tax-exempt income, provided that the annual income is not less than NIS 24,000 and does not exceed NIS 240,000, and that an annual tax return was filed for Year 2018.
- For the purpose of the income text, taxable income from all sources will be examined, that from personal exertion and also not from personal exertion, and the income that is not from personal exertion (like rental income, interest, dividends, etc.) shall be divided equally between the spouses, including tax-exempt income.
- The joint income of two spouses from any source shall not exceed NIS 340,000, including tax-exempt income and after offsetting losses and excluding capital gains and land betterment.
- Business turnover for March – April 2020 shall be compared to the months of March – April 2019 and there must be a decrease of at least 25% between these two periods. If at the end of April 2020, it becomes evident that the decrease in turnover is less than 25%, the grant will have to be returned.
- The business had to have operated at least until 29.2.2020, according to the statement of the business’ owner in the personal field of the online application.
- Only self-employed persons are eligible for the grant – not the controlling shareholders of companies.
- The subject of age limit and offset of losses is still under discussion. We will update in the future.
- Whoever opened a business by September 2019, even though it had no activity in 2018, and is able to compare turnover between the periods March – April 2020 and March – April 2019, is able to receive the grant if he meets the conditions, after filing the 2019 report.
- Amount of the grant:
- For a dealer with turnover of not more than NIS 192,000 in Year 2018, the grant will be 65% of the average monthly income up to NIS 6,000.
- For a dealer with turnover between NIS 192,000 and NIS 240,000 in 2018, the ceiling of the grant is 3,000.
There will be an additional step up to a limit of NIS 8,000 with the same eligibility conditions, that will compare turnover between May – June 2020 and the corresponding months in 2019.
- American citizens
The Coronavirus Aid, Relief & Economic Security (CARES) Act grants U.S. citizens rebates in the amount of $1,200 per spouse, plus $500 per qualifying child under the age of 17, subject to certain income limitations. Rebates are not available to taxpayers and their spouses without valid Social Security Numbers.
Advance payments will be made based on 2018 or 2019 tax returns filed. Otherwise the credits can be claimed on 2020 tax returns.
Relief in other areas
- Corporations Authority – A freeze until 26.4.2020 on declaration of law-violating companies and collection of their debts through the Center for Penalties Collection.
Reports filed with the Amutot (NPO’s) Registrar for Year 2019 may be filed until 31.7.2020.
The Corporations Authority is also taking action to freeze audits of Amutot until the end of the crisis.
- Banks – Mitigations in dealing with companies whose checks have been returned for inability to pay.
It is possible to deposit a check in cellular applications up to NIS 50,000.
2. State-guaranteed loans –
- It is possible to defer repayments by half a year from the date the loan was issued.
- The State guarantee is increased by 85%.
- Collateral that is 10% less than the amount of the loan.
- Rescheduling the loan repayments by up to 5 years.
- Fast process for obtaining bank approval – maximum of 9 work days.
- Exemption from payment of economic feasibility fee on the ordinary track of NIS 250.
- Loan of up to NIS 500,000 or 8% of annual turnover – whichever is higher.
See below for additional links:
- Municipal taxes – Municipalities and local authorities have announced a postponement of local taxes for the months of March – April, such as the Tel-Aviv Municipality, which announced that it was postponing municipal tax payments until 1.5.2020. It is recommended that you check with the local authority in your place of business.
- Electricity – relief was announced, see the link below:
Caspy & Caspy C.P.A was founded in 1965, and has been servicing clients for over 55 consecutive years. The firm is located in Jerusalem and operates throughout Israel. The firm provides a wide range of services to individuals, business entities in all sectors of the economy, non- profit organizations and government bodies under the management of C.P.A Eitan Caspy. The firm includes a U.S tax department for individuals, companies and nonprofit organizations. You can reach the firm by phone at 02-6796606 or you can email them at email@example.com. Please visit their website at https://caspy.co.il/home-en for more information.