Followers | 144 |
Posts | 27707 |
Boards Moderated | 3 |
Alias Born | 02/07/2004 |
Sunday, November 10, 2013 11:49:19 AM
Assuming that Check Point pays a tax rate of 5-6%, its tax liability will be $82-102 million (NIS 300-360 million).
10 November 13 17:31, Tali Tsipori
Check Point Software Technologies Ltd. (Nasdaq: CHKP), Israel Chemicals Ltd. (TASE: ICL), and Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) are members of an exclusive club of corporations that obtained huge tax breaks and were exempt from the companies tax under the Law for the Encouragement of Capital Investment. Now with the pending deadline of the directive granting a discount on taxes on dividends paid from trapped profits, the companies are "compelled" to open their wallets and pay some taxes. Nonetheless, the tax that some companies have agreed, or will agree, to pay is a fraction of the full amount they would have paid were it not for the directive.
We will begin with the biggest of the three companies, Teva. The Israeli generic giant, which is going through a serious management crisis and has a market cap of $32.5 billion, stated in its financial report for the third quarter that it has $15.14 billion (NIS 53.5 billion) in trapped profits, and if it were to pay tax on the distribution of a dividend from them, the tax would total $2.13 billion (NIS 7.5 billion).
This is only theoretical. The trapped profits law is the result of the Law for the Encouragement of Capital Investment, which was enacted in 1959, to encourage investment in Israel. The law states that any company defined as an "approved enterprise" is eligible for tax breaks; in effect paying a negligible tax rate. It also states that a company subject to the law that wants to distribute dividend from the untaxed profits will pay a dividend tax of 15% on top of the companies tax rate of 25%, for a total tax rate of 40%.
This condition resulted in corporations, which accumulated huge profits over the decades, not distributing dividends because of the tax liability that would have applied. To avoid paying the tax, they essentially trapped the untaxed profits. The result was the trapped profits law, which basically allows the corporations to pay a much lower tax rate than the 15% rate on dividends distributed from the untaxed profits, and releases them from paying the 25% companies tax.
In effect, the law grants the companies an additional tax break. The law sets out different tax plans, and there is no uniform tax rate for all companies, so it is possible that some companies will pay far less than the 15%.
As for Teva, it stated in its latest financial report that if it utilizes the trapped profits law, it would pay a maximum one-time tax assessment of $700 million (NIS 2.5 billion), or a tax rate of just 4.6%. In May, the company said that it would pay NIS 336 million in taxes on NIS 5.5 billion in trapped profits (a tenth of its total trapped profits), a tax rate of just 6.1%.
On the basis of Teva's statement that its tax assessment will be $700 million, and excluding what it paid in May, the question is: Will Teva pay NIS 2.1 billion in taxes to the Israel Tax Authority?
As for Check Point, which has a market cap of $11.6 billion, it stated in its financial report for the third quarter that it has $1.7 billion in trapped profits. Check Point, in contrast to Teva, did not mention the amount of its tax assessment, so at this point it is only possible to use Teva's tax assessment as a baseline for an estimate. Assuming that Check Point pays a tax rate of 5-6%, its tax liability will be $82-102 million (NIS 300-360 million).
Published by Globes [online], Israel business news - www.globes-online.com - on November 10, 2013
Recent TEVA News
- Teva Presents New Phase 3 Efficacy, Safety and Tolerability Data from SOLARIS Trial Evaluating TEV-‘749 (olanzapine) as a Once-Monthly Subcutaneous Long-Acting Injectable for Adult Patients Diagnosed with Schizophrenia • GlobeNewswire Inc. • 09/21/2024 08:15:00 AM
- New Data Provide Treatment Insights into Options for Switching Adult Patients Diagnosed with Schizophrenia to UZEDY® (risperidone) Extended-Release Injectable Suspension from Perseris® (RBP-7000) • GlobeNewswire Inc. • 09/21/2024 08:10:00 AM
- Teva to Present at the Bank of America 2024 Global Healthcare Conference • GlobeNewswire Inc. • 09/11/2024 08:30:00 PM
- GameStop plunges 11% on stock offering, DJT drops post-debate, GSK fails shingles vaccine trial • IH Market News • 09/11/2024 10:25:41 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 09/04/2024 11:40:42 AM
- Teva to Present at the Morgan Stanley 22nd Annual Global Healthcare Conference • GlobeNewswire Inc. • 08/26/2024 09:00:00 PM
- Form 144/A - Report of proposed sale of securities: [Amend] • Edgar (US Regulatory) • 08/14/2024 11:06:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/13/2024 08:09:34 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/13/2024 08:06:50 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/13/2024 08:02:28 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/09/2024 07:59:27 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 07/31/2024 08:06:33 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 07/31/2024 11:00:57 AM
- Teva Announces Strong Growth in Second Quarter Revenues mainly driven by Generics Products in All Regions and AUSTEDO®; Raises 2024 Financial Guidance • GlobeNewswire Inc. • 07/31/2024 11:00:00 AM
- US Index Futures Up Ahead of Fed Decision; Oil Prices Surge Amid Middle East Tensions • IH Market News • 07/31/2024 10:01:30 AM
- Teva and Sanofi Announce Accelerated Timeline for Anti-TL1A Phase 2b Program in Patients with Inflammatory Bowel Disease • Business Wire • 07/25/2024 05:30:00 AM
- Teva Announces First Phase 3 Evidence of Efficacy and Safety of an Anti-CGRP Monoclonal Antibody in Children in AJOVY® (fremanezumab) SPACE Trial for Prevention of Episodic Migraine • Business Wire • 07/18/2024 12:30:00 PM
- Teva to Host Conference Call to Discuss Second Quarter 2024 Financial Results at 8 a.m. ET on July 31, 2024 • Business Wire • 07/02/2024 10:00:00 PM
- Les nouvelles données portant sur AJOVY® (fremanezumab) dans la prévention de la migraine remettent en question les pauses thérapeutiques • Business Wire • 06/28/2024 10:34:00 PM
- Neue Daten zu AJOVY® (Fremanezumab) zur Migräneprävention stellen Behandlungspausen in Frage • Business Wire • 06/28/2024 07:41:00 PM
- New AJOVY® (fremanezumab) Migraine Prevention Data Challenges Treatment Pauses • Business Wire • 06/28/2024 03:30:00 PM
- Teva Reaches Agreement With the Israel Tax Authority to Resolve All Pending Litigation for the Company's Taxable Years 2008-2020 • Business Wire • 06/25/2024 12:00:00 PM
- Teva Announces Launch of Authorized Generic of Victoza® (liraglutide injection 1.8mg), in the United States • Business Wire • 06/24/2024 01:50:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/17/2024 12:03:34 PM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM