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Israel Tax Authority to Demand Over NIS One Billion From Teva

Teva did not pay taxes in Israel for the decade preceding 2014, saving NIS 20.6 billion in tax benefits

Omri Milman and Tomer Ganon 12:3016.01.19

The Israel Tax Authority intends to demand Teva Pharmaceutical Industries Ltd. pay over NIS 1 billion in retroactive tax for 2014-2015, according to three people familiar with the matter who spoke with Calcalist on condition of anonymity.

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Teva did not pay taxes in Israel for the decade preceding 2014, saving NIS 20.6 billion in tax benefits according to data from the Israeli Ministry of Finance. After the tax category giving Teva these benefits was canceled following public criticism, the company remained eligible for a lowered corporate tax rate in Israel as part of a legislation aiming to encourage capital investments in the country.

Teva CEO Kåre Schultz. Photo: Yuval Chen

For the fiscal year 2016, Teva reported an effective tax rate of 13.8% in Israel, but following a tax reform, corporate tax rates in the country were lowered. For the fiscal year 2017, Teva stated it paid $96 million in taxes in Israel.

Teva paid taxes in Israel for 2014-2015, but the local tax authority is seeking further payments for the period. To avoid paying more taxes after a final decision is reached, Teva would need to appeal to an Israeli court.