Treasury concealed Teva's 2011 NIS 3b tax break
The amended Law for the Encouragement of Capital Investment means Teva will be exempt on almost all taxes on its profits through 2020.
Moreover, estimates obtained by "Globes" reveal that this tax break was not a one-off deal. On the contrary, the break steadily increased since the Law for the Encouragement of Capital Investment was scandalously amended in 2005. Amendment 60 of the law offers a "strategic track", which allows Teva to benefit from a zero tax rate for ten years, including a zero tax rate on dividends. The amendment means that Teva will be exempt on almost all taxes on its profits through 2020. Over the decade, the tax break will total tens of billions of shekels.
Here's the money, Lapid
The issue of the huge tax breaks for corporations, especially Teva, will be placed on the table of incoming finance minister MK Yair Lapid (Yesh Atid). His election slogan, "Where's the money?" is particularly relevant to the Law for the Encouragement of Capital Investment. It will be interesting to see whether he will overcome the corporate lobby and Ministry of Finance officials, and intervene against the scandalous tax breaks, just as his predecessor, Yuval Steinitz intervened in the issue of gas royalties.
It is also necessary to ask how it happened that the Ministry of Finance never offered even a rough estimate of the scale of the tax breaks under the 2005 amendment to the Law for the Encouragement of Capital Investment compared with the beneficiaries' contributions to direct and indirect jobs in Israel.
"Globes" is preparing to appeal to the district court against the Ministry of Finance and Israel Tax Authority's decision not to provide the newspaper data on the tax breaks or the names of the beneficiary companies in recent years. The ministry has refused to disclose the information claiming that it is confidential under the Income Tax Code, even though the issue involves public money.
The Ministry of Finance said in response, "The data are not necessary;ly as presented, but the confidentiality duty stipulated in tax laws prevents us from providing details."
Teva said in response, "Teva has paid, and pays, taxes according to the law. Since the Law for the Encouragement of Capital Investment was enacted, Teva has applied the purpose of the law and its spirit. The law helps Teva greatly expand its investments in Israel, directly and indirectly, and today Teva operates in the periphery and development areas in Israel with thousands of employees in five more towns nationwide.
"The tax breaks granted under the Law for the Encouragement of Capital Investment have also helped Teva ensure that its production sites in Israel are constantly upgraded to the world's highest standards, so that we can effectively compete in global markets. Teva believes that the policy underpinning the law helps build Israel's industrial base, of which Teva is a major part. This policy helps create incentives for enterprises and helps them support the country's growth, progress, and prosperity. In this way, the policy supports foreign investment in Israel and its national development."
Published by Globes [online], Israel business news - www.globes-online.com - on March 11, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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