Israel panel proposes 25-42 pct tax hike on mining companies

Mon Oct 20, 2014 10:17am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Steven Scheer

JERUSALEM Oct 20 (Reuters) - An Israeli government panel on Monday proposed sharply raising taxes on mining activities, but it softened the blow by recommending a progressive, rather than flat, rate ranging from 25 to 42 percent.

The hike drew the ire of the country's largest mining firm, potash and speciality chemicals maker Israel Chemicals (ICL) , which has lobbied heavily against the tax.

In a final report, the committee recommended a progressive tax of 25 percent after companies reach an annual return on investment of 14 percent, rising to 42 percent for a return above 20 percent.

In an interim report issued in May, the panel had recommended a flat 42 percent tax rate.

Companies would also pay the government royalties of 5 percent of their revenue.

Israel's government currently takes in about 23 percent in taxation from mining companies but that would ultimately rise to 46 to 55 percent, or an additional 400 million shekels ($107 million).

A similar committee in 2011 raised taxation on oil and gas companies after two huge natural gas finds off Israel's Mediterranean coast.

The prospect of paying less to the state than previously expected pushed ICL's shares up 1.3 percent in Tel Aviv. Still, the shares are still down 46 percent since the start of 2013, partly due to the threat of higher taxes as well as falling potash prices.   Continued...