National Insurance changes reporting system
The change is intended to prevent fraud by self-employed persons registering as limited companies.Sources inform ''Globes'' that, beginning in January 2007, the National Insurance Institute plans to change Form 102 reports by businesses to require a monthly statement of the business owners’ salary. Businesses with up to five employees will also be required to list all employees, including their ID numbers and salaries. Such businesses account for 75% of all businesses in Israel. Currently, these details are reported once a year on Form 126.
The National Insurance Institute confirmed the report, saying that it planned to shortly notify business owners about the change. The National Insurance Institute claims that the new reporting method is intended to prevent the long delays in updating business details. “This delay results in retroactive debts, which are sometimes quite large, and are very difficult for insured people to pay,” it said. “The change will prevent a situation in which insured people, who lack insurance periods, being required to find proof and pay slips for their period of employment for which insurance payments were paid on their behalf because their employers did not report them on Form 126.”
Experts in the program said that under the current reporting method, the salaries of business owners was recorded under the “other employees” item, with no name listed, and it was not clear which “other employee” was the business owner. The experts claimed that in some cases, companies filed reports that failed to state the business owners’ real salary.
The new reporting method is reportedly mainly intended to prevent small businesses registering as limited companies, even in cases of a one-man business. Under the old reporting method, a business owner had to file reports on Form 102 only for the employees and their salaries, making it difficult to ascertain who bore the responsibility for the business.
The sources said, “In some cases, a business owner concealed his identity by registering as a limited company, making it impossible to act against him personally and foreclose assets. Nor was it possible to collect National Insurance Institute levies in the event of a debt.”
The new reporting method will enable the authorities to identify the business owner and recognize them as self-employed individuals, even if they are registered as a limited company.
|News Stories|||||News Archive|