JERUSALEM — Two of the world’s most valuable technology companies are pushing Israel to make a significant change to how it collects taxes. Nvidia and Google have formally asked Israel’s Tax Authority to allow them to pay their Israeli corporate taxes in U.S. dollars rather than shekels, a request that gained momentum Monday as Finance Ministry officials signaled new openness during discussions with technology industry leaders.

The request comes as the Israeli shekel trades near its strongest level in decades, climbing roughly 20% against the dollar over the past year and recently reaching about 2.8 shekels per dollar, one of its strongest levels in more than three decades.

The issue may sound technical, but it sits at the center of one of Israel’s biggest economic challenges.

Companies such as Nvidia and Google earn much of their revenue in U.S. dollars but pay salaries, operating expenses, and taxes in Israeli shekels. When the shekel strengthens, every dollar earned buys fewer shekels, making operations in Israel more expensive when measured in dollar terms.

There is another effect as well. When multinational corporations convert large amounts of dollars into shekels to pay taxes, they increase demand for the Israeli currency, which can push the shekel even higher. Paying taxes directly in dollars would eliminate that conversion and reduce additional upward pressure on the currency.

The proposal traces back to one of the largest deals in Israeli technology history.

When Google agreed to acquire Israeli cybersecurity company Wiz for approximately $32 billion, the transaction generated an estimated $2.5 billion Israeli tax obligation for the company’s founders. Converting such a massive amount of dollars into shekels risked creating significant currency-market disruptions.

At the initiative of the Bank of Israel, tax authorities reportedly allowed those taxes to be collected directly in dollars rather than converted into shekels. What was initially viewed as a one-time solution has now become a precedent that other major corporations want to follow.

According to reports from Globes, additional multinational companies have approached the Tax Authority seeking similar treatment.

The largest and most influential request may be Nvidia’s.

Nvidia’s Israeli operations are built around its $7 billion acquisition of Mellanox Technologies in 2020. Mellanox remains an Israeli entity, making Nvidia one of Israel’s largest corporate taxpayers.

During its last fiscal year, Nvidia reportedly paid approximately $1.28 billion in Israeli taxes when the dollar traded between roughly 3.3 and 3.5 shekels. Since then, Nvidia’s business has exploded alongside global demand for artificial intelligence infrastructure. The company’s Israeli operations now generate dramatically more revenue than they did just a year ago, meaning future tax obligations could be substantially larger.

The request applies only to corporate taxes. Employees would continue paying income taxes in shekels under existing rules.

What makes the proposal unusual is that it could benefit both sides.

For companies, paying taxes directly in dollars reduces currency-conversion costs and limits exposure to exchange-rate fluctuations.

For the Israeli government, each tax payment received in dollars means fewer dollars being converted into shekels, easing some of the pressure pushing the currency higher. The government can also use those dollars to help service Israel’s own dollar-denominated obligations.

In effect, the arrangement could provide a modest tool for managing currency pressures without requiring direct intervention from the Bank of Israel.

Not everyone is convinced.

Critics argue that allowing giant multinational corporations to pay taxes in dollars while smaller Israeli businesses continue paying in shekels creates an uneven playing field. Others note that the policy addresses a symptom rather than the underlying cause.

The shekel is strong because Israel’s economy — particularly its technology sector — continues attracting foreign investment and generating substantial export revenue despite nearly three years of regional conflict.

That irony is difficult to miss. The same technology companies that helped drive billions of dollars into Israel and strengthen the currency are now asking the government for relief from the consequences of that success.

Still, momentum appears to be building.

Officials participating in Monday’s discussions reportedly showed greater openness than in previous meetings, leading many analysts to believe Israel may eventually create a formal framework allowing at least some large multinational companies to pay taxes in dollars.

The issue reaches far beyond taxes. Israel’s technology sector helped create the strong shekel by attracting billions of dollars in foreign investment and export revenue. Now some of the same companies responsible for that success are asking the government to help shield them from its consequences.

If Israel ultimately allows major multinational companies to routinely pay taxes in dollars, the decision would mark one of the most significant changes to corporate tax administration in years. It could also become another tool in the government’s effort to ease pressure on a currency that has become both a symbol of Israel’s economic strength and a growing challenge for the companies that helped create it.

JBizNews Desk — Israel

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