Israel Finance Ministry Drafting Plan to Compensate Businesses

The Finance Ministry is preparing a plan to compensate businesses that will likely center around grants for employers who keep workers on payroll as Israel heads toward another lockdown .

Government sources told TheMarker that there are an estimated 40,000 businesses that aren’t being ordered to close starting Friday, but are likely to see their business hurt anyway. Under the plan, these businesses would be compensated if they do not put their workers on unpaid leave.

The current formula under deliberation would compensate companies based on the percentage of lost revenue and the percentage of employees who remain on payroll. A budget of 5.3 billion shekels is under discussion. To date, some 1.8 billion shekels has been paid out to employers who took workers back after putting them on unpaid leave.

A report by the Employment Service indicates that the grant program may have exhausted its ability to influence the labor market. The original grant program covered the first four months after employees were taken back to work, and in many cases this period hasn’t yet ended. Employers were left wondering what would happen should they put these workers back on unpaid leave. This prompted the new compensation plans.

The government is also discussing compensating small and mid-sized businesses who experience reductions in revenues of 25 percent or more, as was done during the first lockdown.

In addition, municipal tax (arnona) discounts are being extended through June 2021. A 95 percent discount will be granted to businesses with revenues of up to 200 million shekels a year whose income is down by at least 60 percent from the parallel period last year.

A 95 percent discount will also be given to businesses with revenues of 200-400 million shekels a year, whose revenues are down at least 80 percent from last year.

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The discounts will be retroactive as of June 2020, and eligibility will be reexamined every two months.

The local authorities themselves will be compensated for the lost 1.3 billion shekels in municipal taxes.