Iscar, owned by Warren Buffett's Berkshire Hathaway, and the Tax Authority are wrangling over use of the company's profits.
Sources inform ''Globes'' that the Israel Tax Authority has assessed Iscar Ltd. for NIS 2 billion for trapped taxes.
Iscar and the Tax Authority have been wrangling for months over the use of the company's profits under the Law for the Encouragement of Capital Investment. Top financial sources have told "Globes" that they estimate the company's tax breaks at hundreds of millions of shekels. However, it is clear how the company has used its profits on which the Tax Authority wants to levy the 15% rate set for trapped profits distributed as dividends.
Iscar, a manufacturer of cutting tools for metalworking, has 2,500 employees in Israel and 7,500 more employees at other sites worldwide. The company was founded by Stef Wertheimer, whose family still owns 20% of it after selling 80% to Warren Buffet's Berkshire Hathaway Inc. (NYSE: BRK-A) for $4 billion in 2006. Media reports claim that, since the sale, Iscar has doubled its revenue, despite the global economic crisis. 2011 sales were reportedly $3 billion.
As a private company, Iscar is not required to disclose its revenue or profits. But it is one of Israel's leading companies, which benefits from tax breaks under the Law for the Encouragement of Capital Investment. Sources close to the company's dispute with the Tax Authority told "Globes" that the amendment to the law in early 2011 benefited the company because the amendments give large tax breaks to exporters.
The sources said that the Tax Authority has told Iscar that it will not hesitate to issue warrants against the company and go to court, if, as one source said, "Iscar does not realize that it must pay a large tax assessment."
The Tax Authority said in response today, "Due to confidentiality, we may not discuss the tax aspects of any company. In general, the Tax Authority, as it told the Knesset Finance Committee during the debate over trapped profits, seeks to issue assessments on this and other matters wherever there is a dispute over a tax liability."
Published by Globes [online], Israel business news - www.globes-online.com - on February 19, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
You comment was recieved and soon will be published.
Thank you for posting your comment, which will be reviewed for publication.
Load more comments