Israel's Minimum Tax Collection Stalled by Political Dispute
Translated & summarized from Maariv by baba
Israel is struggling to implement a minimum tax on multinational corporations, enacted in January 2026, due to a political dispute blocking necessary regulations. Without approval, Israel may lose tax revenue to other countries. The Ministry of Finance aims to pass the regulations quickly after the new Knesset is formed, potentially allowing for retroactive collection.
The story in 5 lines · by baba
- Israel's minimum tax law for multinationals is stalled by political disputes, risking lost revenue.
- The law requires companies with 750 million euros in revenue to pay at least 15% tax.
- Regulations needed for Israeli tax collection are held up by coalition-opposition disagreements.
- Other countries may collect the tax if Israel's regulations are not approved.
- The Ministry of Finance hopes to approve regulations retroactively for 2026.
Israel faces a significant delay in collecting a minimum tax from multinational corporations, nearly ten months after the relevant law took effect in January 2026. The delay stems from a political dispute between the coalition and opposition parties, which has prevented the approval of necessary regulations by the Knesset's Finance Committee. Without these regulations, Israel risks losing out on tax revenue, as the funds could be collected by other countries where these companies operate, such as the country of the parent company's incorporation.
The law, aligned with OECD guidelines, requires large multinational corporations with an annual consolidated revenue of at least 750 million euros to pay an effective tax rate of at least 15% in every country where they operate. If their tax rate is lower, a supplementary payment can be collected. The Israeli law was intended to enable the Tax Authority to collect this supplementary payment for activities within Israel.
While the Ministry of Finance cited election periods and Knesset scheduling as reasons for the delay, the core issue is the use of the tax regulations as leverage in a dispute over tax benefits for charities. Although no estimate exists for the potential lost revenue, the Ministry and Tax Authority are committed to expediting the regulations' approval once the new Knesset is sworn in and the Finance Committee is appointed.
Despite the delay and the approaching end of the fiscal year, there is still a possibility to approve the regulations and gain international recognition for Israel's tax mechanism, retroactive to the beginning of 2026. Therefore, lost revenue is not yet a certainty. However, the ongoing uncertainty may impact how these companies present their tax liabilities and related uncertainties in their year-end financial reports for 2026.
