Google, Facebook, eBay and other foreign companies that do business via the Internet in Israel are now obligated to pay value added tax (VAT) and income tax, even if they don't have a physical headquarter based in the country.
The Tax Authority set new guidelines on Monday. Under those terms, companies from other countries running websites and selling products and services will have to pay 17 percent of VAT plus income tax.
Every company that carries out activity in Israel will have to go through paperwork with local authorities so that they'll be considered as an enterprise that can legally operate there. That way, their transactions will be processed through with the VAT.
The Guardian notes that the possible companies that will be subject to the new conditions include but not limited to Amazon, eBay, Facebook and Alphabet-owned Google.
Facebook has already addressed the matter, but it did so without providing further details.
"Facebook pays taxes according to the law in every country it operates, including Israel," the social media company says.
Meanwhile, a Google spokesperson based in Israel declined to comment, and Amazon and eBay were not readily available to make a comment.
Before the Tax Authority implemented these new terms, foreign companies only had to pay taxes if they earned their income in Israel, and that's only when activity is enough to make them a "permanent establishment" in the country.
On an interesting note, a blimp that read "Google must pay tax" hovered above the skies of Tel Aviv in proximity of Google's local offices there. Israeli pilot and politician Yoav Kisch launched the aircraft, sending a clear message in an admittedly creative way.
What's more, the Tax Authority is also looking into a law that will cause transactions with foreign online stores be liable to VAT, and that includes e-books and music downloaded from the Internet.
