"Globes" has filed an administrative petition with the Tel Aviv District Court against the Ministry of Finance to disclose the tax breaks given to big companies in recent years, after the ministry refused previous requests by the newspaper.
In the petition, submitted by Adv. Yoram Muszkat, "Globes" is demanding that the Ministry of Finance disclose information under the Freedom of Information Law. This month, "Globes" reported that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) received a NIS 3 billion tax break in 2011 alone.
An investigation by "Globes" also found that there is no basis in reality for the Ministry of Finance's argument that it was not possible to know, following the amendment to Law for the Encouragement of Capital Investments in 2005, that Teva would join the strategic track, granting it a zero tax rate in Israel. The law's strategic track stipulates two main criteria for a tax break: a consolidated turnover of at least NIS 13 billion, and a minimum investment (in machinery, equipment, and R&D) of NIS 600 million.
Had the legislators who passed the law examined Teva's financial report for 2003, which was available when the amendment was under discussion, they would have discovered that the company's consolidated turnover exceeded NIS 13 billion, and that its investments in that year were slightly below the threshold. In other words, any knowledgeable person would know that Teva would be eligible for the law's strategic track granting it a zero tax rate, especially since Teva had at the time at least ten years patent protection for Copaxone, the company's most important source of profits.
Teva paid a tax rate of 21% in 2003, compared with the negligible rates paid in recent years. The company explicitly said in its financial report that the rise in its tax rate in 2003 was due to the expiration of the benefits period on a substantial part of its profits.
Published by Globes [online], Israel business news - www.globes-online.com - on March 18, 2013
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