Leading Israeli Industrialist Faces Tax Indictment

Final decision pends on pre-trail hearing on accusations that Shraga Brosh evaded a NIS 1.5 million ($430,000) liability

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Leading Israeli industrialist Shraga Brosh.
Leading Israeli industrialist Shraga Brosh.Credit: Tomer Appelbaum

Shraga Brosh, president of the Manufacturers Association of Israel and a leading industrialist, will be indicted along with two others subject to a pre-trail hearing on suspicion of evading some 1.5 million shekels ($430,000 at the current exchange rate) in taxes, the prosecutor’s office for tax and financial affairs said on Wednesday.

Brosh, along with his brother Yariv Brosh and accountant Michael Bar-Levav, who worked with them, are charged with committing aggravated fraud, falsifying documents and tax evasion.

The three were arrested in June 2018 when the case was first revealed. At the time the arrest prompted calls from manufacturers association members, where Shraga Brosh has been president since 2005 (excluding a three-year break between 2012 and 2015), to step down, but he has remained at the post.

The Israel Tax Authority claims that when a company controlled by the Brosh brothers sold a 14% stake in Oshrad Natural Gas for 8.6 million shekels in 2017, they should have paid 4.3 million shekels in tax.

Because Oshrad is a privately held business, it was liable for a 26.3% company tax on the sale and the Broshes themselves were liable for another 32% in personal taxes – a combined 50% in taxes after adjustments. Instead, the company reported itself as a family business, which is liable to a single 32% tax.

The problem, prosecutors said, is that the law requires companies to register as family businesses with three months of being formed.

The Brosh brothers filed documents with Bar-Levav, asserting that they did that in October 2014, before the three months deadline. However, the form they claimed to have filed was only issued for the first time in June 2015, causing the tax authorities to maintain that it was faked.

A spokesman for Shraga Brosh said in response that Brosh did not commit any offense and he would declare his complete innocence in the pre-trial hearing.

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