Another Israeli tech company is transferring money overseas from its bank accounts in Israel due to concern about the government’s planned judicial reform, Channel 12 News has reported. Cybersecurity company Wiz has announced that it will transfer its money in Israel to bank accounts around the world. Wiz was cofounded by CEO Assaf Rappaport, the former head of Microsoft’s development center in Israel.
Wiz is following Israeli payroll platform Papaya Global, which 10 days ago announced a similar move whose CEO Eynat Guez said at the time, “Following declarations by Prime Minister Benjamin Netanyahu that he is determined to enact reforms that will harm democracy and the economy, we have taken the business decision to move all the company’s money from Israel. In the emerging reform, there is no certainty that we can conduct international economic activity from Israel. This is a painful but necessary business step.”
There is little substantial economic significance to the move except as a protest which could sweep other companies along with it and encourage the withdrawal of capital from Israeli banks. Transferring money from deposits and current accounts of businesses in Israel is easy to execute and does not require the board of directors to convene or have any major financial significance for the company conducting he move, or for the Israeli economy.
Companies incorporated in Israel, even those with many offices around the world, are required to pay the Israel Tax Authority on all their money deposited in branches around the world. Israeli companies managed by Israeli residents are liable to pay tax on the interest earned from their money deposited in the US and Israel.
Furthermore, as a company with hundreds of employees in Israel, even companies that keep the bulk of their money abroad need to transfer part of it to an Israeli account every month in order to continue paying salaries. If a company sincerely wanted to avoid economic uncertainty regarding the legal reform, it would close its operations in Israel and its founders would change their status as residents of Israel.
So far the Tal Barnoah’s Disruptive venture capital fund has announced that it will raise its future funds from overseas bank accounts, while automatic transcription and captioning company Verbit CEO Tom Livne announced that he is leaving the country and will stop paying taxes in Israel. Market estimates are that other companies are making a similar move without making a clear statement. So far, foreign investment funds such as Insight Partners and Index Ventures, as well as companies such as Wiz (which is a portfolio company of the two funds mentioned above) and Atera Networks have officially spoken out against the planned judicial reform.
Published by Globes, Israel business news – en.globes.co.il – on February 6, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.
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