Knesset enacts Trapped Profits Law by one vote

The Knesset plenum this evening enacted the controversial Trapped Profits Law, the flagship reform in the 2025 budget, by the slimmest of margins in its second and third readings – 59 votes in favor and 58 against. The law is expected to bring NIS 9 billion into the state coffers and allow a balanced budget in 2025.

Prime Minister Benjamin Netanyahu was forced to leave his hospital where he is recovering from surgery to remove his prostate, and come to the Knesset to vote after Minister of National Security Itamar Ben-Gvir decided to oppose the law to protest clauses in the budget.

Netanyahu wrote in a post attacking Ben-Gvir, “There is no greater irresponsible folly than to shake up the coalition at this time or risk toppling the right-wing government. The Minister of Finance and I are navigating Israel’s economy in the longest and most expensive war in Israel’s history in a responsible and professional manner.” “Trapped profits” are profits accumulated in companies on which only companies tax, at a rate of 23%, has been paid. Only if the profits are distributed as a dividend will additional tax of up to 30%, plus a surtax in many cases, be payable as income tax.

Published by Globes, Israel business news – en.globes.co.il – on December 31, 2024

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