"The issue of the royalties that Israel Chemicals pays to the Israeli government is another challenge that we face at the same time as our struggle to obtain an test mining permit of phosphates at Sde Barir. Against the backdrop of these challenges, and despite the business environment and public climate which are more difficult and challenging than ever, we intend to continue to grow and develop over the coming decade," says Israel Chemicals Ltd. (TASE: ICL) president and CEO Stefan Borgas in a letter to employees.
Borgas wrote the letter in response to Minister of Finance Yair Lapid's decision to establish the Sheshinski 2 Committee, chaired by Prof. Eytan Sheshinski, to review the government's take from the use of Israel's natural resources. The committee will submit its recommendations later this year.
The Sheshinski 2 Committee will examine the royalties Israel Chemicals pays on its mining operations and on natural resources. Israel Chemicals says that it welcomes the establishment of the committee, but that there is no justification in raising the government's take on the company's operations. "In the past two years, the government has sharply raised the tax rates and royalties paid by Israel Chemicals, which already pays the highest taxes in Israel, amounting to NIS 1 billion annually," says Borgas in his letter.
Israel Chemicals says that it currently pays 41% of its pretax profits to the state. This tax rate will rise to 59% in the coming years, the highest government take in the world on potash deposits. In the letter, Borgas says that, in addition to the agreement on royalties between the company and the government from two years ago, the company will cover 90% of the cost of the salt harvesting in the southern basin of the Dead Sea.
Published by Globes [online], Israel business news - www.globes-online.com - on June 30, 2013
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