14 October 12 18:32–Sources inform ”Globes” that the Ministry of Finance estimates that it will receive NIS 1.35 billion in taxes from two companies with some of the biggest trapped profits: Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and Check Point Software Technologies Ltd. (Nasdaq: CHKP). Before the Knesset disperses for early elections tomorrow, it is due to approve the trapped profits bill, which grants huge tax breaks for large companies, in its second and third readings.
The analysis is based on the two companies’ financial statements. Teva and Check Point should pay NIS 2.7 billion on their trapped profits, but the 50% tax break in the bill will halve their immediate tax payment.
The sources added that since the bill was drafted, the Ministry of Finance has been in advanced but unofficial talks with Teva and Check Point. Ministry sources said that the estimate assumes Knesset passage of the trapped taxes bill, that the companies will not make more legal difficulties, and that they will pay the lower tax assessment. The cabinet secretary says that the Ministry of Finance expects a NIS 2-3 billion tax windfall when the bill is approved, which means that Teva and Check Point will provide around half of the total.
Reducing the revenues shortfall
Last week, the Ministry of Finance reported deficit figures for September, but did not publish the figure for the 12 preceding months. Figures obtained by “Globes” show that the budget deficit ballooned to an all-time high of NIS 37.5 billion in October 2011-September 2012, or 4.1% of GDP – more than double the original 2% target in the 2011-12 biennial budget and well above the revised target of 3%…Read More>>