Israeli defense electronics company Elbit Systems Ltd. (Nasdaq: ESLT; TASE:ESLT) has reported that an amendment to Israel's Law for the Encouragement of Capital Investments will detrimentally effect its fourth quarter financial results. The company, managed by CEO Bezhalel Machlis, reported that its upcoming financial statement will include a one-time expense of $80 million.
The amendment to the Law, which was passed last November as part of the budget's Economic Arrangements Law, has changed taxation on dividends distributed from August 15, 2021.
Elbit said that any distribution of a dividend after that date by a company that has income that was exempt from tax under the Law will include an amount of exempt earnings, and an amount of non-exempt earnings, according to the proportion between them. The amount distributed from Exempt Earnings will be subject to payment of full corporate tax. The Amendment includes a temporary provision that allows payment of reduced corporate tax on exempt earnings accumulated until December 31, 2020 that were not yet distributed as a dividend.
After reviewing the matter, Elbit decided to implement the temporary provision and as a result pay the reduced corporate tax in an amount of about $80 million.
Elbit's share price is currently up 1.76% on Nasdaq at $175.55, giving a market cap of $7.87 billion.
Published by Globes, Israel business news - en.globes.co.il - on February 23, 2022.
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