This may be a first. Companies in Israel have been making money by paying too much tax.
I’ll pause while you take that in.
In essence, after a reduction in the tax rate, companies did not reduce their tax payments. Whether this was done deliberately or otherwise is not certain. However, when it came time to reconcile payments, these companies were due a refund. And here’s the kicker. The refunds attracted interest at 4%, a rate higher than the companies could have received had they paid the money into a bank… In short, the tax man became a kind of bank!
The worst effect is that because of this somewhat strange set of circumstances, the budget predictions are off, and the state is looking at a deep deficit. Oh dear.
Check out the report in Globes, here.
Only in Israel?