ICL to pay NIS 380 million in taxes on released ‘trapped profits’

Finance Ministry Yair Lapid welcomed decision, promises to keep working with companies to release profits.

By NIV ELIS, GLOBES
Lapid looking sharp 370 (photo credit: Marc Israel Sellem/The Jerusalem Post)
Lapid looking sharp 370
(photo credit: Marc Israel Sellem/The Jerusalem Post)
Israel Chemicals (ICL) on Sunday announced it would incur NIS 380 million in taxes to release ‘trapped profits,” a term that refers to earnings companies choose not to pay out, usually over tax considerations.
The profits will come from ICL’s companies Dead Sea Works and Rotem Amfert Negev.
Finance Ministry Yair Lapid welcomed the decision, and promised to keep working with companies to release profits so that they “get to their real owners, the citizens of Israel.”
In an attempt to entice companies to release the profits, the Knesset passed a law offering companies tax significant breaks--as high as 40-70%--to release the profits. The window for taking advantage of the law, however, expires this week, so the Tax Authority has also been conducting negotiations with other large companies such as Check Point and Teva to act.
To date, the Tax Authority has collected NIS 1 billion in taxes under the trapped profits law, well below its target of NIS 3 billion by the end of the year. Yet the falling deficit has given the Finance Ministry some wiggle room.
Despite writing off 2013 as a high-deficit year, setting the deficit target at a sizable 4.65% of GDP, the actual deficit in the 12 months through October amounted to only 3.3% of GDP, the Finance Ministry announced Sunday