JERUSALEM, Dec. 23 (Xinhua) -- Israel's Finance Ministry announced on Tuesday that a special tax will be imposed on the country's banks after they reported substantial profits this year.
Israel's banking sector is dominated by five major banks, which together registered profits of 24.7 billion shekels (7.73 billion U.S. dollars) in the first three quarters of the year, according to central bank data.
Following recommendations from a government inter-ministerial committee, Israeli Finance Minister Bezalel Smotrich decided to apply a 15-percent tax on a bank's profits that exceed 50 percent of its average profits recorded between 2018 and 2022. He explained that the special tax is intended to ensure a fairer redistribution.
The new tax, which still requires parliamentary approval, is set to take effect in early 2026 and remain in place for five years.
From 2027, the tax-exempt profit threshold will be linked to GDP growth rate to avoid taxing banks' natural expansion.
According to the ministry, the new tax will increase state revenues by 1.13 billion shekels in 2026 and by 1.5 billion shekels annually from 2027 to 2029.
