The corporations which received tax breaks to release trapped profits have promised to invest NIS 1.8 billion in Israel over the next five years.
An Israel Tax Authority source told "Globes" this morning, "The law requires the huge companies to make big investments in Israel, and the State of Israel will benefit from investment in salaries, machinery, and R&D. There is a huge benefit from the trapped profits law, great economic good, and contribution to growth, jobs, and the country in the coming years, which is very important. These are not financial investments that will go abroad, they've made billions in commitments, almost NIS 2 billion in investment in the Israeli economy."
In the past couple of days, Check Point Software Technologies Ltd. (Nasdaq: CHKP), Israel Chemicals Ltd. (TASE: ICL), and Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), as well as smaller companies, have announced the release of tens of billions in shekels in trapped profits, on which they will pay NIS 4.3 billion in taxes. Teva is making the largest tax payment: NIS 2 billion on the release of NIS 33 billion in trapped profits.
Teva now plans to invest hundreds of millions of shekels in Israel in the coming years, mostly in R&D. This investment does not contradict the company's streamlining plan, which includes 5,000 layoffs worldwide, including hundreds of employees in Israel, because alongside the cost-cutting, the company plans to continue R&D to create future growth engines.
"Pursuant to the requirements of the law and in addition to the tax payments, Teva will invest an additional hundreds of millions of shekels in Israel in the coming years in plants (especially to expand the pharmaceuticals facility at Har Hotzvim in Jerusalem), fixed assets in development areas, R&D activity, and to establish a national network for excellence in brain, neurology, and psychiatric research," said Teva.
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2013
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