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Israeli Dealers Respond to Charges by Tax Authorities

Nov 23, 2004 4:44 AM   By Martin Rapaport
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(Rapaport...November 22, 2004) Leading diamond dealers Ilan Samuel and Asher Rosenbaum say that they are involved in a legitimate long term dispute with Israeli tax authorities and that recent actions taken by the authorities are not expected to have impact on their business activities. Dealers report that Samuel-Rosenbaum Diamond Co. is trading in the market normally and meeting all its financial obligations.

Samuel and Rosenbaum Attorney Udi Barzily had this to say about the actions taken by the Israeli tax authorities. “Rosenbaum and Samuel are involved in a legitimate dispute with the Israeli tax authorities. Negotiations with the tax authorities have been ongoing for about four years and in the court system for approximately the past two years. The dispute is of a commercial nature. We are shocked by and strongly disagree with the tactics that the tax authorities are using to turn this legitimate commercial dispute into a criminal matter. As to the heart of the matter - there are answers to all of the claims made by the tax authorities and we believe all charges to be dismissed in the near future.”

Editor’s note: Israeli tax authorities have recently adopted a more aggressive attitude relative to the diamond trade and international businessmen residing in Israel. There are numerous reasons for this including a change in Israeli tax law effective January 1, 2003 whereby Israeli citizens and residents were required for the first time to pay tax on all worldwide income. The laws in Israel are such that it is relatively easy for the tax authorities to make criminal charges in matters that in most countries would be limited to commercial litigation

Most Israeli diamond firms participate in a cooperative agreement that sets estimated income tax levels based on the overall turnover of a company. As long as the income levels and resultant taxes are within the guidelines the companies are rarely subject to disputes with the tax authorities. Given the relatively new Israeli tax on overseas income and the international nature of the diamond industry, implementation of compliance relative to management and control, transfer pricing and other relevant issues are being negotiated. Over time we expect reasonable compliance norms to evolve and a less volatile relationship between the Israeli tax authorities and the international diamond trade.

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Tags: Compliance, Israel
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