Teva's tax breaks in 2006-11 totaled NIS 12b

The Finance Ministry's partial list shows that large corporations received NIS 16.5 billion in tax breaks in 2006-11.

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) received NIS 11.77 in tax breaks in 2006-11 under the Law for the Encouragement of Capital Investment (the Ministry of Finance and Israel Tax Authority have not yet provided data for 2012). Teva's tax break ballooned from NIS 1.29 billion in 2006 to NIS 2.89 billion in 2012, as "Globes" earlier revealed.

The Ministry of Finance and Tax Authority had claimed at the time, "The figures are not necessarily as reported."

The Ministry of Finance today disclosed the tax breaks granted to companies under the Law for the Encouragement of Capital Investment, after "Globes'" successful campaign to reduce the astonishing - some would say infuriating - breaks obtained by large companies. The ministry did not disclose the names of private companies which receive tax breaks under the law, pending a hearing by the Supreme Court on the ministry's appeal against the disclosure.

In response to the disclosure of the tax breaks, Minister of Finance Yair Lapid said that he would review the corporate tax breaks.

Check Point Software Technologies Ltd. (Nasdaq: CHKP) received NIS 1.65 billion in tax breaks in 2006-11, Israel Chemicals Ltd. (TASE: ICL) received NIS 2.2 billion, Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) received NIS 404.7 million, Oil Refineries Ltd. (TASE:ORL) received a one-time break of NIS 140 million in 2006, and Rafael Advanced Defense Systems Ltd. received NIS 144.7 million in tax breaks in 2010-11.

Altogether, the partial list of tax breaks released by the Ministry of Finance shows that large corporations received more than NIS 16.5 billion in tax breaks in 2006-11.

In 2011, three public companies - Teva, Israel Chemicals, and Check Point - and one government company, Rafael, received NIS 3.84 billion in tax breaks. Teva received 75% of the total. In 2010, five companies, the four above plus Elbit Systems, received NIS 3 billion in tax breaks, of which 75% accrued to Teva.

The list of companies which received tax breaks in 2006-11 includes thousands of other firms, which continue to receive the breaks. The Ministry of Finance did not disclose the amounts.

In response Teva said, "Teva is a public company that values its transparency. It has and will continue to pay taxes in full compliance of the law. Teva has fulfilled the purpose and lives up to the spirit of the Law for the Encouragement of Capital Investment. The law greatly contributed to Tevas expansion in Israel, to the countrys competitiveness, and to boosting the periphery."

Teva added, "In the past decade Teva has doubled the number of its direct employees in Israel to more than 7,100. In addition to 3,000 contract workers and 40,000 who work for its suppliers, Teva supports 50,000 Israeli jobs."

Teva said it "has invested considerable resources around the country, and in particular in the periphery. It has recently built and maintains state-of-the-art facilities in Neot Hovav in the Negev, Kiryat Shmona, and Jerusalem, in addition to large sites in Kfar Saba, Shoham, Ashdod and Petah Tikva. In the past 10 years Teva has invested NIS 8 billion constructing new facilities and NIS 15 billion in R&D. Teva is Israels largest exporter, exporting goods worth NIS 140 billion in the past decade, including NIS 120 billion since 2006, when the company doubled its overall exports out of Israel."

"As a result of this law and of Tevas investments, Israel has become a biotech power and is one of the worlds largest per capita manufacturers of life-saving medicine. Teva believes that the underlying policy behind this law helps build Israel's industrial and manufacturing foundation, in particular in the country's periphery. Such policy creates incentives for Israeli business and helps it support the growth, progress and prosperity of the State of Israel."

Israel Chemicals said in response, "Israel Chemicals (ICL) has clearly and significantly fulfilled the public interest under the law to encourage capital investments in firms in the periphery: more investments (total of NIS 6 billion), more export (cumulative of NIS 65 billion) and more employment in the Negev (1000 new direct jobs created and 6 times this number in the form of contractors and business partners), during 2006-2012."

Israel Chemicals added, "The net benefit that the Israeli economy received with the help of the investments has been significant. ICL encourages the continuation of such policies for the sake of our country. The specific tax benefits have been transparently published annually in ICL's financial statements. In 2011, ICL and only ICL has been excluded from the Law to Encourage Capital Investments and since it has been paying the highest governments take in Israel which totals 41% of the company's revenues before tax from mining potash in the Dead Sea. In 2012, ICL paid over NIS 1.2 billion in tax and royalties to the state, more than any other company in Israel".

Published by Globes [online], Israel business news - - on July 16, 2013

Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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