In Episode #21, we are joined by Ofir Angel, chairman of AUREN Israel and an expert on advanced technologies and international taxation. We discuss:

  • How Ofir grew a family business into a global consulting firm.
  •  Israel’s consolidation as an attractive investment destination over the last two decades and why Israeli businesspersons focus on international opportunities.
  • How US companies in particular can benefit from Israel’s massive investments in infrastructure projects and the country’s advantages in life sciences.
  • The critical importance of tax considerations when doing business abroad.
  • Israel’s recent signing of a peace deal with the United Arab Emirates and which countries may follow the UAE.
  • Reading, listening, and watching recommendations from:

If you have comments on this episode or if you’d like to suggest topics for future episodes, please email globallawbiz [at] harrisbricken [dot] com.

And please follow Fred and Jonathan on social media to stay informed on upcoming guests and topics:

We’ll see you next week for another discussion on the global business environment as we sit down with Glenn Davies to discuss cannabis in Asia.

This podcast audio has been transcribed by an automatic transcriber.

Fred Rocafort 0:08
Global law and global business go hand in hand but never seem to keep pace with each other, BRICS and other developing and developed nations wax and wane and their importance on the global stage. While consumption and interconnectedness both increase, laws and regulations change incessantly requiring businesses to stay nimble. How do we make sense of it all? Welcome to global law and business posted by Harris Sliwoski International Business attorneys. I’m Fred Rockford

Jonathan Bench 0:34
and I’m Jonathan Bench. Every Thursday, we take a bite sized look at legal and economic developments and locales around the world as we try to decipher global trends in law and business with the help of our international guests. We cover continents, countries, regimes, governance, finances, legal developments, and whatever is trending on Twitter. We cover the important the seemingly unimportant, the relatively simple and the complex.

Fred Rocafort 0:59
We hope you enjoy today’s podcast. Please connect with us via email on social media to comment and suggest future topics and guests.

Jonathan Bench 1:17
We’re joined today by Ofir Angel, the chairman of Auren Israel Israeli office of the International leading consulting firm Auren, the firm is one of the top 20 consulting firms in the form of firms fo f under the restricted professional standards of the International Federation if ac ofera is also the chairman of antiA an international alliance of independent firms with a global spread of 300 offices in more than 70 countries around the world. The firm helps businesses with business development, technology, marketing and sales, finance, accounting and audit and international taxation. Ofir is a certified public accountant and an international and Israeli taxation expert and he assist clients with tax consulting, accounting and audit and business development. His clients include commercial and industrial companies, family businesses, self employed businesses, governmental Institute’s public organizations and nonprofit organizations. Ofir also holds an MBA and is a certified Information Security Manager and a certified Information Systems auditor. He frequently lectures at international conferences in Europe and Israel on international taxation, management and business. Ofir. Thank you for being with us today.

Ofir Angel 2:26
Hi, Jonathan. Thank you for hosting me up here.

Fred Rocafort 2:30
Welcome to our podcast. If we could, let’s get things started by having you describe your career path and having you discuss your own experience as an entrepreneur.

Ofir Angel 2:42
Okay, great. Fred, I started my let’s say professional life in the field of taxation, local taxation in Israel and following that with an international taxation trying to get to the global activity and international activity that was my aim. During the years, I also involve myself in innovation and in all kinds of startups, some of them related to service providing and some of them related to technology. But all the things that I’ve done during my career until today was aiming to the target of assisting companies, increasing the profit, profit and increasing the company value. Also internally and also for clients. In the last decade, I think that my focus was in the international activity, taking our family firm that my father established to the international field from let’s say, being focusing On taxation and accounting to become a global international consulting firm. And in the last more than more than more than 10 to 12 years, we joined our international. And actually, this is our role today in Israel, providing services for companies that want to improve their bottom line and improve their company value by giving multidisciplinary assistance with big team of consultants that assist companies through several direction not only from the eyes of taxation and accounting, knowing that this is probably the right way to assist companies today in the world in this fast changing agile world of business today. So yeah, this is the basically.

Jonathan Bench 4:56
so what’s happening in the Israeli business world right now that we should be aware of?

Ofir Angel 5:01
Well, let me give you two main points regarding the Israeli business world today. First of all, from the economic point of view, I think that in the last two decades, Israel became a very solid and stable place for investors and intrapreneurs. In Israel, you will have a very solid and very strong banking system. Money Laundering legislation very, very severe and which is good for the system. And actually a free economy with a very competitive internal market focusing on innovation, creation of knowledge, are indies and you may find quite a lot of Israeli business people. I think this is the majority of them are focusing on of your own international opportunities because Israel is Let’s say an island economic island in the Middle East. I think that all the Israeli business people understand that opportunities is in connection in with with the international world. I think that it was been already thus this way for the last several decades and now it’s proving itself so the economics is very stable and very solid for the last years not influencing from the International, let’s say challenges of the world. This is the let’s say the basic situation currently today, due to the corona virus and COVID-19 crisis. I think that there is an influence but not a severe one. Meaning that internally the economy, we are suffering currently from high unemployment rate, but it’s supposed to be only that’s a for several months or a year from now. But basically the government continue investing quite a lot of money in the market when quite a lot of budget are directed to infrastructure projects, which might be good for the economy and for intrapreneur and for investors to continue pumping the economy forward and to continue growing in Israel, although the current situation is is controlling the globe. And I think that it’s generating also quite a lot of business opportunities. I can tell you, let’s say about two main focuses of our activity in our in Israel regarding business opportunity. The first one is, as I mentioned, since the government is is budgeting, quite a lot of intake of infrastructure projects. We are talking about in Israel it’s big amounts of money. We’re talking about 2 billion 200 billion shekels the budget of the last year and the upcoming budget supposed to be approved of over more over 400 billion shekels for the coming year. So, this is huge amount of money that the government investing in the in the country and infrastructure project which is generating quite a big opportunities for investors and for international companies to join this celebration of, of tenders that the government is offering Usually, it’s a good open door for US companies to do some activities in Israel. We are talking about generally three to seven years projects. And as my experience a lot of European and US companies are are getting into the market because of that. They have an advantage of being international companies coming with the resume and with experience of big projects, which is why it is lacking because the country is small and bringing their technology using sometimes engineers from Israel but coming with the knowledge and the ability to do those projects. So this is one of a good opportunities for for companies coming from abroad. And another focus on on US companies that they have also advantages in several of the tenders that the government is offering because the government is obligated to spend part of the budget on US companies because of getting some of the budget from support supported by the US government to Israel. So you can find all kinds of Homeland Security military Industrial energy and infrastructure like roads and tunneling that the government is obligated to choose American companies in some of them, which again, is quite a good added value or advantage for those company coming from the US. So, basically, this is one good opportunity that I can explain. And the second one is the advantage of Israel in the field of Life Life Science, which Life Sciences is quite a big area of expertise starting from agrotech, food tech and the upper hand you have satellites and all kinds of technologies generated the systems. So Israel is very experienced in that field. You have quite a lot of r&d, research and development Companies here, all the main companies in the world also the the US companies are having a branch here in Israel to develop the technology. And I think that the world come to the understanding that Israel is that say the second second Silicon Valley of the of the world or at the very least of the Middle East. So they have their eyes focusing on that. And we are assisting quite a lot of companies coming to Israel trying to do some joint ventures invest buy out the the technology, to shorten time to market procedures in in their factories in their companies, and maybe win the competition with the Israeli technology. So generally, those are, I think, two good opportunities for investors and foreign companies coming to Israel, infrastructure and life science. It’s very interesting to hear

Fred Rocafort 12:00
What you just described, specifically, the part about Israel being required or Israeli companies being required and in some instances to, to at least give a preference to US companies that that’s very interesting. I was I was not aware of that. I, I know that for example here in the US, in some cases there there are requirements to choose American companies certainly in the case of government procurement. So that’s very interesting and obviously a huge advantage to US companies entering the the Israeli market, shifting away from from Israel itself and then looking more at at your work generally. Could you describe just how important international tax considerations are for companies when they’re doing business around the world?

Ofir Angel 12:53
Well Fred, usually when you are doing local businesses, you are getting this system of local professionals, once you are heading out to the international market, usually most of the business people that I meet are not familiar with international taxation or international legislation of company corporate legislation and such. And basically they need to get a system of someone who’s specializing the international activity and also to get people from the local country that you want to do business in where are you heading to because usually also the mentalities is different and this is influencing your your, your ability to to succeed in in in international activity. The taxation I think, is to my opinion, and this is the reason that I choose this professional profession. Usually when we’re coming to discuss international activity, we’re asking three main questions. From the tax legal point of view, we’re asking our clients, where is the money coming from investors, capital, who’s the shareholders? What are you going to do with the money? What kind of project? What is your business plan? And at the bottom line, where is the money supposed to reach in the end dividend transfer of profits? exit? Whatever is your plan. So where it’s coming to from we’re going to do with the money and what is your target? And, and to understand that we are usually examining six somewhat secure six, basic tax legislation, international taxation. First of all, we are checking the double tax treaty, the multi, multi territorial tax treaties sometimes because if there is several countries involved, we need to check let’s say the multiply double tax treaty. Second is the regime of corporate tax and dividend tax employees tax. Third is the VAT which is usually neglected because it’s considered a local tax, but once you are doing international business activity, you need to consider the other side VAT. We are considering customs, intellectual property taxation. And last but not least, is the old ecommerce and new commerce, taxation starting from blockchain currency and up to blockchain linguistics and other e commerce and new commerce, activity and taxation that you aware of all those field of taxation as I mentioned, six fields of taxation are overall given an impact of about 50% 50% or they say this is the exposure that if you are not having a proper tax planning, you might suffer sometimes, even if With a bit more 52 or 53%, at least when you are doing some business activity with Israel. In the other hand, if you are having a good tax planning, you can minimize that too. That’s a several percentages of taxation. I can tell you that the majority activity that our clients have from the US in Israel and Beckford, and they are reaching an average tax, minimization of between 20, round about 20% and tax so we can see that the impact of international tax planning is tremendous. It’s huge. It’s sometimes the difference between having a profit and having a loss or in the good situation. Instead of having a profit of 50%. You might have a profit of 70 or 80%. So it’s quite significant.

Jonathan Bench 16:58
And so do you find that that is the case in most industries in any given business deal, regardless of where, you know, which countries are involved in which industries are involved, that proper tax planning can can save, you know, 10 20% on the overall deal?

Ofir Angel 17:16
Yeah, absolutely. Absolutely. I’m and then when I’m talking about tax planning, I’m not talking about tax avoidance. I’m talking about legit legal tax planning that if you are considering that, and checking everything in both sides of both countries, including international activities, usually you can find yourself with that say, round about saving 20 to 30% of non plan taxation. So it’s quite significant. worldwide. I can tell you that our experiences with majority of countries in Europe, America, US and South America and also with Asia. It’s quite significant. Yes.

Jonathan Bench 18:03
So let’s turn back and focus on Israel again for a minute because Israel and the United Arab Emirates just announced a peace deal. Can you tell us how significant that peace deal is for establishing diplomatic relations between those countries? What What will that all they do for them economically and from a security perspective?

Ofir Angel 18:22
Well, first of all, any peace process any peace, peace activity in this region is is, you know, personally where everybody’s very happy with that. From the business point of view, I can tell you that in the last several years, we already had a business activity and connection with the Emirates and other countries in the area. But the challenge was that it’s supposed to be discreet. We have a business connection is very business people are doing already been done.This activities with Emirates mainly with Dubai and Abu Dhabi. Basically, we were doing that by not a very complex tax planning or structuring planning through Europe companies. This is the majority of activities. So we already have been doing that. The main difference is now that it can be done out in the open, and I suppose that quite a lot of companies will go to that direction, which was officially closed until today, and it was discrete. There is quite a lot of topics that are mutual for the Emirates and for Israel, as I mentioned, life science technology, which we know that in the last years, United Arab Emirates tried to invest quite a lot in those fields. And maybe to have some kind of and To change the, let’s say economic power from oil to technology, and I do believe that they are investing quite a lot and obviously succeeding in that. And this is something that’s very common to Israel and to the Emorites. That direction of technology, and innovation. And I think that Israel could be a very good partner for that. And I do believe that this is already going on. I think that I can tell you that only in the last two weeks from the announcement, which is not signed yet. But already from the announcement, we got quite a lot of referrals coming to us asking to establish connection to check the market. And luckily for us in our room, and in our network, we have a partner in Dubai, which we are already in the last year already in quite a lot of connection. So now it will be only increased and I think that we are All very excited about that and very happy. And keep in mind that it’s a good opening door not only for the Emirates, it’s a good opening door also for other countries in the region that still are hesitating or waiting to see the development, the economic development of both countries. A fear that that actually provides a perfect segue for for our next question.

Fred Rocafort 21:26
Could you perhaps speculate a little bit about other countries that might follow the UAE in establishing formal diplomatic relationships with with Israel and perhaps at a, I guess, also, there might be countries that don’t have those relationships already those business relationships sorry, but my my take that that that first step as well, so so The way I see it, there could be two things happening right. You might have countries already have the developed business relationship, taking it to the next level. And meanwhile there might be countries that perhaps at the moment have no relationships with with Israel, but might say, Okay, look, maybe maybe we can start at least tentatively exploring what what, what what we can do in terms of business. And related to all this. What about the relationship with Iran? Where do you see that going forward?

Ofir Angel 22:27
Well, Fred, I think that let me start with the the last point of your question, the relationship with Iran from economic point of view, unfortunately, is from Israeli point of view is not going anywhere probably. Because there is no no signs of willing to compromise in the political point of view. But as I usually I’m not, I’m not taking notes regarding to the political point of view. I’m leaving that to the actual But the politicians but from the economic point of view, I it’s not influencing Israel in any matter or any any situation because it’s been done already the relationship the is like the same for the last several decades and and it’s not influencing. In the other hand, sometimes I think that it’s it’s challenging the Israeli economic community to grow outside of the Middle East. And this is part of the I think, advantages or added value of the Israel economy. The fact that it was an island from the beginning, it’s a democracy in the middle of the Middle East, and that Israel was obligated to generate right from the start economic relationship with Europe, America and Asia. And I think that the stronger the base of the Israeli economy is structure on those connections and understanding that Israel itself is a small model. And in that case, all the activity, I think that all the factories and, and the industrial activity in Israel is focusing on exporting knowledge, and sometimes goods but mainly knowledge outside of Israel abroad. So the situation with the, let’s say, those country in the Middle East that are not looking for peace activities is not influencing for the best, but those who are going to any peace process on any normal normalization of activity that might bring more prosperity to both countries, the first one or let’s say, after Jordan and Egypt that are already having good, good commercial activity with both of them. Now, I’m happy to see that the United Arab Emirates joined my understanding that probably Qatar with join following that might be Yemen and Saudi Arabia. Those countries that say already have none official commercial relationship and we are looking forward to them to join. Probably it will be step by step each country will want to see that the first one or the second one succeeding but from, let’s say personal and economic commercial point of view, I have no doubt that it will bring prosperity to all the region. If I remember, late Prime Minister Shimon Perez, that was his dream, his dream was saying, Okay, this is supposed to be a new Middle East that will allow Israel to go out of the island situation and to have commerce with the new partners and they need neighbors. And that’s supposed to be a very positive not for the Israeli growth in the coming years, so therefore, we are quite excited. And looking forward to that

Jonathan Bench 26:07
Ofir, we’ve very much enjoyed having you with us on the show today. We always like to close each episode with recommendations from you and from us something that our audience could read or listen to or watch. And in your case, it could be something regarding lsrael business, international business, anything else? You’re you’ve been doing business for a long time, and certainly, we would love to hear what you have to recommend to us in that regard.

Ofir Angel 26:34
All right, Jonathan. So let me give you two points of recommendation. First of all, regarding those or the listeners that want to do some business activity in Israel or with Israel, let me humbly offer them to take a look in our blog, in our website, our in Israel. Probably you will find from time to time updates regarding business activity, new opportunities. And I think that might be interesting. The other point is well might come as a surprise to you. But I would like to recommend the listeners regarding the field of mindfulness. I’m not sure that all of them heard about that. It’s quite. It’s not it’s already not new, the field of mindfulness but I’ve been, let’s say, studying and practicing mindfulness for the last several years. And in the last two years, we are integrating mindfulness inside our business activity internally in r1. And also in the activity consulting activity with our clients. You can find quite a lot of, of articles and you can listen to YouTube and Ted lectures regarding mindfulness and business activity, which is very interesting to see how it assists in the business, community and companies around us to generate, again, more profit, more more value for the company, but by, let’s say, a positive direction of growing the person. So I can I can recommend on one book very good book that I read recently. It’s also I think, published in Amazon. So you also can hear that it’s called the mind the time, how to how 10 mindful minutes can enhance your work, health and happiness by Michael Chaskalson I’m hoping that I pronounced that correctly. But no doubt if you print mine time in Google, you’ll find that it’s a very, I think interesting book about mindfulness and then you can do some exercises regarding how to combine and to enter mindfulness to your business activity, we got quite a good feedback in the last two years that we are conducting that in Israel for our clients. And it’s it’s it’s proven to be a very positive direction. So that’s that’s a my personal recommendation for the listeners.

Jonathan Bench 29:23
Very good. We appreciate that. Fred, what do you have for us?

Fred Rocafort 29:28
Well, first of all, just a general recommendation closely, closely tied to the topics we’ve been discussing, or at least some of them when you look at Israel’s history with with its neighbors, that there’s there’s a lot of interesting stories that might not be that that well known. For example, I think now with with everything that’s happening with the UAE, people are free to talk and now we’re really finding out what how deep the the business relationship is. But if you were to look at other other countries, you would also find, perhaps surprising bits of history. So I was I was reading a little bit about the relations between Israel and Pakistan. And then there was a lot that I didn’t know about about that. But both in terms of I guess, there was a time when when the relationship was was rather acrimonious and then actually, things started moving in the opposite direction. So that was kind of interesting. So again, no specific recommendation. Just you know, if you’re bored one day want to take a look on Wikipedia, this is or the internet generally I find this to be a, an interesting subject. And then as far as a more formal recommendation, since since we know since since we are talking about Israel, I’m going to go ahead and recommend one of my favorite Netflix series and I would actually love to hear a fierce opinion about it because obviously I come at it from a totally different perspective. I’m sure Israelis have have their own opinions about it. And of course those those are those opinions are much more valuable than than my own as an outsider. But there there’s a Netflix series called Falda. I know a lot of people have have picked up on it here in the US, but at the same time, I think it’s still it’s still relatively unknown. I still I still run across people that that haven’t seen it. And I guess there’s from what I’ve read, there’s some debate about the politics and portrayals but if you’re just going to break it down to the most basic level, right, I think it’s it’s very well produced a fantastic acting. interesting tidbit, the the main actor used to be Arnold Schwarzenegger’s bodyguard. He’s an Israeli and I just I just really enjoy it. I guess there’s you know, if you’re if you started looking into it a little bit more deeply I guess that’s when people might have different views about it but in terms of its entertainment value, I find it I find it to be very well done. Um, so again, the the name of the of the series is called Falda. And, Ofir if you’d like to jump in and share your your your views about it, please, please do.

Ofir Angel 32:34
Yeah, yeah, absolutely. Well, I think that this is a great TV series by netflix founder. It’s It’s full of action. And those of us who love this, this kind of genre, I think that we’ll be addicted to that. And unfortunately, it’s describing let’s say not very imaginary situations. The area So, and this is only the movie, you know, sometimes a real life is more challenging and harder than the movie. But I think that one of the interest is thinking in this TV show is also in Falda although you have a lot of action and politics that people might think that is not accurate or more accurate and and other. But I think that the main thing that you can learn that we are talking about people, if you are putting aside the politics, this is people that have lives. And it’s it’s interesting to see that also friendships coming out of both parties and both sides. And I can tell you that in real life, quite a lot of personal and business activity has been done between the sides and the parties because it’s easier to people to get to a peaceful assisting the politicians so I’m hopeful hoping that the politicians will be encouraged of the activity that they seen by the people because, you know, it’s it’s two nations who are living together. It’s it neighbors centers, we’re working together we have partners inside Israel that some of them are Jewish, Muslim, Christians are Arabs and other nations and other Arabs in agents. So I think that this is the the best thing that I can tell you about this movie that you can see the actual human relationship between the parties, sometimes it’s bad sometimes sometimes is better. I think this is the hope for the future. And as you mentioned, no doubt that if I’m relating that to the business world and what is happening with other countries or countries around these Well, you do see that if you are leaving the people to live together, they will find a common ground there. We’ll do business together, they will have the life positively going to the right direction.So yeah, again, a great series, and do recommend that.

Jonathan Bench 35:14
So my recommendation is an article in The Economist, and the title is Israel UAE deal is good news for a troubled region. And I think that it highlights very well what Ofir has been telling us. Here’s a little excerpt. The authors wrote, this reflects a remarkable remarkable changes that have already taken place. A part of the world wants to find by Arab Israeli hostilities is no longer so countries increasingly look towards the future, not the past and shaping the policies. So yeah, not a long article. Good. You know, I always appreciate the economist overview because it’s very international writing very international focused and in good context for someone like me, who, you know, the hostilities have been happening. Since before I was born, so it’s nice to get perspective from those who have been around much longer on how this, how this changes the region or how it reflects rather the changes that have been happening. So that’s my recommendation. Ofir we want to thank you again for, for being on the show with us. We appreciate learning from you. And we’re excited to hear about the positive business developments just recently, but also, you know, that have been trending in Israel in the last last couple decades.

Ofir Angel 36:30
Yeah, thank you, Jonathan, and Fred for hosting me. And if I may, if I finish our conversation with a say that I heard in the news from a guy in the street in in the Emirates. He was saying it’s easier to have conversation with a friend than with an enemy and therefore let’s promote the friendships. And then we were able to get to the common ground. So and I think that this is a good positive note.

Fred Rocafort 37:00
I agree that that’s a that’s a great way to to put an end to the podcast. So again, thank you for for for sitting down with us and we look forward to having you on the podcast again. Great, thank you.

Jonathan Bench 37:16
We hope you enjoyed today’s podcasts. We look forward to connecting with you on LinkedIn, Facebook, Twitter and anywhere else you want to find us until next week.

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