The tax break of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) rose to an unprecedented high in 2012, to become the largest ever tax break ever received by a single Israeli company: NIS 3.2 billion, up from NIS 2.9 billion in 2011.
In July 2013, after petitioning the courts, "Globes" revealed the tax breaks given to large corporations in 2006-11. During this period, Teva received NIS 11.8 billion in tax breaks; the breaks in 2012, boost the figure to NIS 15 billion over seven years.
It should be noted that assessments - the tax charge or tax break - are usually closed two years after a public company files its financial report with the Tel Aviv Stock Exchange (TASE). In Teva's case, the assessment for 2012 is only now being closed, in the first half of 2014.
In addition, there is a big difference between what the company declared in its notice to the TASE and what the Israel Tax Authority requires, partly because a company's tax liability in the TASE filing is based on different accounting rules from the adjusted filing for tax purposes. In Teva's case, the difference is huge: in its latest filing, it reported a tax break of $520 million (NIS 1.8 billion) in 2012, but the actual figure was NIS 3.2 billion.
One of the main arguments in favor of the tax breaks is their alleged contribution to jobs creation. Teva states that it added 2,358 employees in Israel in 2006-12, when it received NIS 15 billion in tax breaks. However, in the past three years, when the tax breaks reached new records, the company's local workforce was stable, and it actually fell by 234 employees in 2013.
Teva said in response, "The figure that Teva published (in the tax clarification in the financial report) is $520 million for 2012. That is the number that we can confirm."
The Tax Authority did not respond by web-posting.
Published by Globes [online], Israel business news - www.globes-online.com - on April 9, 2014
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