Tax Authority: 14,271 business reported their closure - CofaceBdi: 49 thousand were actually closed

How is it possible that the number of businesses closing is actually declining when Israel is experiencing one of the biggest economic crises in the country's history. According to data from the business information company, CofaceBdi, between January and September 2020, 49,125 businesses were actually closed. In contrast, data from the Tax Authority show that only 14,271 business owners reported to the Tax Authority the closure of a business during this period. According to CofaceBdi, in July and August the number of businesses that ceased operations increased sharply (87% and 99%, respectively) - but the number of closure applications submitted to the tax authority during that period actually decreased sharply (62% and 75%, respectively).
Does this mean that in Israel today there are tens of thousands of "dead-living" businesses - which are not officially declared dead just because their death / closure certificate has not yet been officially signed by the owner.
The tax authority has not yet had time to analyze the findings in depth, but even there they explain the decrease in the number of closures, as due to a number of reasons, including "failure to close the business for the purpose of continuing to receive the grants." Although the reception of the public in the offices of the Tax Authority was more limited than usual, but not to the extent that it prevented the submission of an application to open or close a business. The offices also worked during the holiday season and offer the option of requesting the closure of a file on the digital channels as well.
"Once we identify that a business has physically ceased to operate, or estimate that it will not resume operations, it enters our calculation of a closed business. It is not necessary for it to submit a formal application to the tax authority for us to consider it."
Of course business owners are not to blame. They face an impossible reality that has befallen them on a clear day. They are facing economic uncertainty about their future, while the state has not provided them with good enough solutions. Therefore, of course, they will try to get all possible assistance.
Cofacebdi claims that there is an increase of about 52% in the number of inactive businesses in the economy and those that will not return to operation the day after the corona. "Once we identify that a business has physically ceased operations, or estimate that it will not return to operations, it enters our calculation of a closed business. It does not need to make a formal application to the tax authority for us to consider it," explains Tehila Yanai, co-CEO of the company. We are seeing more and more businesses closing down the activity, with an emphasis on businesses from the trade areas like cafes, restaurants and fashion; Businesses in the field of services, such as beauty salons and hairdressers; And businesses in the fields of tourism and events, "adds Yanai.
From the beginning of the crisis until the end of September, about NIS 36 billion was transferred under the Ministry of Finance's assistance program, to what is defined as "business continuity" - including a grant for fixed business expenses, an employment incentive grant, assistance to certain industries (such as tourism), tax rebates and deferred payments. . This amount also includes loans granted to businesses guaranteed by the state in the amount of NIS 20 billion, as well as guarantees for credit insurance in the amount of NIS 1.9 billion and deferral of payments in the amount of NIS 4.6 billion.
Talks we had with business owners in the field of catering, revealed that more than once they actually closed the business, but made a decision not to report it to the authorities. The reasons they presented are different and varied: some are not interested in dealing with the bureaucracy involved. Others still hope for a miracle that will keep them alive. According to everyone, this is not due to a desire to receive grants from the state. Bottom line, however, as far as the state is concerned they are still a living business that may be eligible for grants.
Simultaneously with the expected collapse of existing businesses the day after the corona - according to data from the Tax Authority, since the beginning of the year (January-September) there has been a 10% decrease in the number of businesses opened - 26,597 businesses compared to 29,650 in the same period in 2019.
"Almost no one announced a total closure, nor am I saying in a wavy brush that I made a clear decision that the brasserie would not open again."
Data from the business information company CofaceBdi also show a decrease of about 15% in the number of business openings compared to last year. In January-February this year - before the first closure was imposed - there was a single percentage increase in the number of businesses opened, compared to the same period last year. As of March, however, there has been a tens of percent drop in the number of business openings. The peak was in April - the record for the first closure - with a 63% drop in the number of openings. In May, during which various industries began to return to activity, the decrease in openness moderated to 28%.