Israel Chemicals Ltd. (TASE: ICL) announced today that its board of directors has decided to release all the trapped profits held by subsidiaries Dead Sea Works and Rotem Amfert Negev, and that the company will pay NIS 380 million in taxes as a result.
The Israel Tax Authority is also in intensive talks with Check Point Software Technologies Ltd. (Nasdaq: CHKP) and Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) on the release of trapped profits, 36 hours before the expiration of the trapped profits law, which grants companies the right to release trapped profits at reduced tax rates.
The Tax Authority is in talks while sending a clear message to the large corporations that after obtaining large tax breaks under the Law for the Encouragement of Capital Investment, the time has come to return part of them to Israeli society.
To date, the Tax Authority has collected NIS 1 billion in taxes under the trapped profits law, well below its target of NIS 3 billion by the end of the year. The law expires at midnight on Monday, and the Tax Authority is now continuing talks Teva and Check Point to release trapped profits and collect NIS 2 billion in taxes, which will enable the Tax Authority to reach its target.
The trapped profits law was passed in 2012 under then-Minister of Finance Yuval Steinitz. The law grants companies, which received tax breaks under the Law for the Encouragement of Capital Investment, a 60% discount on the taxes they should pay, and a companies tax rate of no less than 6%. At issue are more than NIS 120 billion in trapped profits, on which the companies would have paid NIS 27 billion in taxes were they to pay the full tax rate.
Published by Globes [online], Israel business news - www.globes-online.com - on November 10, 2013
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