Israel unlawfully charges taxes despite normalization process, Turkish CEO says

ANADOLU AGENCY
ANKARA
Published 03.06.2016 23:59
Updated 04.06.2016 00:01
Ahmet Reyiz Yılmaz, the CEO of Yılmazlar İnşaat, which has operations in Israel, said the Israeli Finance Ministry has unlawfully imposed a retrospective tax.
Ahmet Reyiz Yılmaz, the CEO of Yılmazlar İnşaat, which has operations in Israel, said the Israeli Finance Ministry has unlawfully imposed a retrospective tax.

Israel imposed a retrospective tax obligation worth $40 million on Turkey's Yılmazlar İnşaat, which has operated in Israel for 22 years. According to CEO Yılmaz, this practice is unlawful and wrong in the light of the normalization process of Turkish-Israeli relations

Ahmet Reyiz Yılmaz, the CEO of Turkey's Yılmazlar İnşaat, which has operations in Israel, said the Israeli Finance Ministry has unlawfully imposed a retrospective tax obligation of $40 million on the company, adding that he finds this unlawful practice very wrong amid normalization talks between Turkey and Israel.

Yılmaz argued that the Israeli government might be trying to collect the compensation it will pay to Turkey from Turkish companies. Underlining that Israel should not violate law in its relations with a company that has been offering service for 22 years, Yılmaz said they face an unlawful transaction in a period when Israel seeks reconciliation with Turkey to export its natural gas to the country.

According to Yılmaz, Yılmazlar İnşaat has tax immunity and that the Israeli government was not previously obliged to pay taxes for foreign workers. In the wake of a government decision regarding foreign workers that was made in 2003, tax liability of companies that employ foreign workers was aggravated by 8 percent in an attempt to give more advantageous positions to local workers. As a result, companies with foreign workers which freely entered the market without royalty agreements with the government started paying additional taxes to the Israeli government. Yılmaz noted that the Israeli government has kept Yılmazlar İnşaat exempt from this additional tax since the law was enacted in 2003, adding that the company did not pay the tax for Turkish workers it employed between 2003 and 2015. Every year, the company sent a notice to the Israel Finance Ministry, submitting balance sheets which showed that it did not pay the tax.

Despite this, a junior official from the Finance Ministry sent an order of payment to Yılmazlar İnşaat. Although the company objected to the order, the issue was brought to a local court which was not authorized to try the case. Referring to the agreement which granted tax exemption to the company regarding the Turkish workers it employs, Yılmaz said, "In accordance with the agreement which was signed between the Turkish Defense Industry Undersecreteriat and the Israel Defense Ministry-affiliated IMI company, any conflict should be brought to Switzerland's Zurich Court where the issue will be tried according to Turkish law. Israel's local courts does not have authority on the issue."

Arguing that Israel goes against the agreement regarding the prevention of double taxation between the two countries, Yılmaz said, "The Turkish Finance Ministry sent a notice to Israel saying that this practice regarding Turkish companies and their workers was completely unlawful and against the existing bilateral agreement and that it means discrimination. It asked Israel to stop this unlawful transaction."

Yılmaz called on Israeli Prime Minister Benjamin Netanyahu to abolish the tax debt in question.

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