OASIS

                        ORGANIZATION OF ADVOCATES SPECIALISING IN INTERNATIONAL SERVICES

 ISRAEL DEVELOPMENTS 2009-2010

David Golan, Law Office of David Golan

1. The battle between the Supreme Court and the Treasury

In our 2007 report we related the judgment of the District Court allowing partial deduction for child care payments. In April 2009 the Supreme Court (C.A. 4243/08 The Vered Perry case) dismissed the appeal confirming the right to deduct child-care expenses paid while incurring income. 

However, the Court did not allow deduction of the expenses for meals or education since they benefit the child, not the mother, so about two thirds of the expenses were allowed. The court emphasized the importance of mothers to return to work. 

This ruling caused great concern for the Treasury, as it was estimated that the ruling would cost Millions of Shekels. In a quick reaction, the Income Tax Ordinance was amended (Amendment No. 170) 3 months after the ruling. According to this amendment, child-care payments are not tax deductible. However, the amendment adds a tax credit of about NIS 2,268 per annum, beginning in 2012, for every child until the age of 5 years. Of course this is far less in comparison to what was granted by the Supreme Court.

2.  Taxation

2.1 - Corporate Tax was reduced to 25% in 2010, with intention to further reduce it to 18% in 2016.

2.2 - Personal Income Tax was reduced in 2010 to 45% and will be reduced further to 39% by 2016.

2.3 - The rate of tax on sale of real estate purchased before 1960 will be increased by 1% to 2% from 2011.

The rate ranges from 12% (if purchased until 1948) and is increased for each year by 1% - 2% up to a maximum of 24% if purchased in 1960.

The rate of tax on sale of real estate purchased after 7.11.2001 is 20% (25% if sold by a company).

2.4  - In order to encourage the distribution of dividends, a low tax rate of 12% (instead of 25%) applies to distribution of profits accountable till 2003 if distributed till 30.9.10.

3. The right to appeal in Arbitration Proceedings

An arbitration judgment granted the plaintiff 100 Million NIS (= $22.5 Million) without giving the grounds due to the fact that the parties had exempted the arbitrator for providing reasoning of his judgment. This scandalous judgment caused many corporations and businesses to refrain from using arbitration proceedings for resolving disputes.

The arbitration institute, of which I am a member, proposed the possibility of a right to appeal if the parties agree about it when signing the arbitration deed. The Knesset adopted the idea and in 2009 amended the Arbitration Law.

The appeals will be heard before an arbitrator (usually a retired judge). This final arbitration judgment can be annulled only by a court if the content of the judgment contradicts public benefit or there is any cause that a court of law would amend a final judgment.

Hopefully this amendment will bring back confidence in arbitration proceedings. 

4.  The rights of Agents

There is a blue print pending, which, if accepted, will partially regulate the relationship between agents, manufacturers, businesses, distributors, etc. The draft law is pro agent, as in its most important clauses it provides minimum notice periods when the agency/ distribution agreement is terminated. Furthermore, monetary compensation is granted even if the contract is terminated by the agent. The length of the notice period and the sum to be paid is related to the length of the period the agreement was in effect. The draft law will apply even to agency agreements signed before the law comes into effect.

It is a pity that only the aspect of termination is dealt with by the draft and no other elements of agency / manufacturer agreements, since until now there is no statute regulating the company / agent relationship.

5.  The conflict between the right to a good name and the right of anonymity on the Internet

In a recent judgment (A.C. 4447/07 Mor v. Barak E.T.C) the Supreme Court ruled that the right to anonymity prevails. In this case Mr. Mor - a healer - was discredited by an anonymous person in a chat room on the Internet. Damaging things having been said against him, Mr. Mor applied to the court in order to receive from the Internet provider the details of this slanderous person in order to sue him.

In an attempt to find a balance between the rights of good name and anonymity, the majority held that in the absence of any criminal activity, the right to express oneself anonymously is part of freedom of speech. In the conflict between this right and the right of Mr. Mor to his good name, the former prevails.

The minority judgment disagreed stating: the Internet is not the “wild west” and is subject to restrictions.

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