Israel’s Economic Cabinet has approved the recommendations of the government appointed committee on taxation of companies benefiting from the country’s natural resources. The unanimous vote on Monday is expected to increase the government take from minerals and will lead to Israel Chemicals Ltd. paying $110 million annually in additional taxes starting in 2017. The committee decided to make a minor change by allowing ICL and other companies to include research and developments costs in offsetting the tax.
The government appointed committee last month recommended a surtax on excess profits of between 25-42 percent and a royalty payment of 5 percent.
The vote in the Cabinet vote was unanimous. The recommendations now go to the Knesset for final approval and will then be implemented. Sources expect the Knesset to approve the measure.
Prior to the meeting ICL called on the government not to approve the recommendations arguing that they will force the company to close its magnesium plant and accelerate efficiency plans at the company’s plants in Israel’s southern Negev region. In addition ICL said it would cancel planned investments of $700 million in Israel and re-evaluate planned investment of nearly $1 billion. The company repeated that it would divert investments to other parts of the world.
The company called on Finance Minister Yair Lapid to take these factors into account and understand that the adoption of the committee’s report will make him responsible for the resulting serious consequences of unemployment and the severe blow to industry in southern Israel and to the Israeli economy. ICL charged that the committee’s recommendations will impose the highest tax burden in the world on the production of potash, phosphate and bromine.