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Shai Aharonovitz approved as new head of Israel Tax Authority

The government on Wednesday approved the appointment of Shai Aharonovitz as the new head of the Israel Tax Authority.

Aharonovitz, 48, who has held the position of senior deputy director of the Israel Tax Authority will replace Eran Yaacov, who has served as the authority’s chief for more than five years.

“Shay is the right man in the right place to lead the Tax Authority in the coming years and drive it towards a new technological era that will focus on collection and improving services and lead and cracking down on black market money and organized crime,” said Finance Minister Bezalel Smotrich.

The approval comes after Smotrich tapped attorney Aharonovitz from a final list of three candidates recommended by a search committee chaired by the Finance Ministry’s Director-General Shlomi Heisler. All three candidates were senior Tax Authority officials serving as deputies to the outgoing head Yaacov, the Finance Ministry said.

Aharonovitz started his career at the Israel Tax Authority in 2001, where he held various roles across all areas of the tax office and managed headquarters and field units as well as advancing legislative reforms and amendments. Over the past five and a half years, he served as senior deputy director at the Tax Authority responsible for managing real estate and land taxation offices.

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The 22-year Israel Tax Authority veteran led various automation processes such as the automatic execution of tax assessments and the digitization of all the historical data at the Tax Authority. Furthermore, he spearheaded the introduction of online reporting services for the public and the integration of internet systems and services into a national service center.

The Tax Authority offices in Jerusalem. December 1, 2019. (Olivier Fitoussi/Flash90)

The Israel Tax Authority was established following a government decision in 2003 to merge the income tax, land taxation, customs and VAT departments and bring revenue collection under one roof. The authority is responsible for the collection of direct taxes, including income and capital gains taxes, real estate taxes, extraordinary levies, payroll tax and revenue tax.

Collection from state tax income in August totaled NIS 32.6 billion, down 7.2% compared with the corresponding month last year, according to data published by the Israel Tax Authority. In the first eight months of the year, tax income fell by 7% year-on-year. Direct taxes declined by about 11% in August versus the same month in 2022 and by 9.3% in the first eight months of this year compared with the corresponding period last year.

That’s as the global economy is facing a slowdown and higher borrowing costs are hampering the pace of real estate deals. Adding to this is concern that uncertainty over the planned judicial overhaul will stifle foreign investment and hamper local economic activity.

The drop in direct tax revenues in recent months derived mainly from a sharp decline in real estate tax revenues and corporate taxes and an increase in tax refunds. Net income from real estate taxation almost halved to NIS 1.2 billion in August from the NIS 2.2 billion collected during the same month in 2022. The figure marked the lowest level since the start of 2021 for a the third consecutive month.

The collection from purchase taxes plunged by 45% in August year-on-year and income from property betterment taxes fell by 54% year-on-year. On an accumulative basis, income from real estate taxes has dropped by 43% since the start of the year.