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The Tel Aviv District Court has ruled, in a precedent setting decision, that bribes amounting to $860,000 paid to government officials in a foreign country to promote a deal will not be considered an expense recognized for taxation purposes in Israel. Judge Magen Altuvia said in justifying his decision that, although the bribe was paid overseas and related to overseas activity, nevertheless, “the country’s values do not stop at its borders; if bribe payments are allowed as an expense, the Israeli tax paying public becomes a partner in these  foul acts.”

Details of the company and the country involved were not allowed to be published, in order not to endanger the people concerned.

The Tel Aviv District Court declared that even if a bribe is paid overseas, the country’s values do not stop at its borders.

According to the company, the Netanya tax inspector undertook to recognize 8-10% of the expenses as “special” expenses, even without supporting documentation, but eventually changed his mind.

“In allowing bribery expenses, a seal of approval is given to corrupt and corrupting conduct, to corrupt regimes that do damage to the world’s economic fabric, for example by harming fair competition and in other ways,” the judge said.

Altuvia added that bribery and recognition of bribery undermined the foundations of freedom and equality. “This allowance contradicts Israel’s obligation to be faithful to the United Nations charter,” he said.

source: Globes Online