After years spent below the threshold of 1 billion shekels, Israel’s sovereign wealth fund is approaching 2 billion shekels. In June this year, the Israeli Citizens Fund began operating after the levies it collected surpassed the minimum of NIS 1 billion. Today, three months later, the total collection is close to 2 billion shekels.
The Israel Tax Authority released a forecast for the collection of tax on profits from the oil and gas industry and super-profits on natural resources, showing that the total collection until August 31, 2022 was 3.84 billion NIS, of which 1.88 billion NIS was final. .
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Non-definitive levies are sums paid as a down payment or withholding tax during the tax year. After the end of the tax year, the actual levy due is calculated in the company’s financial statements and becomes final.
Local gas companies pay several types of taxes to the state on their income and on gas production: Company tax, like any other company; royalties on the production of gas from natural resources in the public domain, calculated on the basis of the quantity of gas produced; and a levy on super-profits (the “Sheshinski tax” named after Professor Eytan Sheshinski who headed the committee that recommended the tax), on the basis of which the Israeli Citizens Fund was created.
Each quarter, the Israel Tax Authority transfers to the Accountant General of the Ministry of Finance the levies collected (both final and non-final). The Accountant General manages the non-final levies until they become final and, once a quarter, transfers the final amounts, plus profits or minus losses, to the Israel Citizens’ Fund after converting them into foreign currency.
Figures released by the Ministry of National Infrastructure, Energy and Water Resources show that in the first half of 2022, royalties on natural gas and mineral production jumped 50% to NIS 829 million. This increase is due to record production from the Leviathan and Tamar gas reservoirs in the first half of the year and a rise in the shekel-dollar exchange rate.
Finance Ministry figures show that 700 million shekels were paid into the Israeli Citizens’ Fund in August alone.
The Israel Tax Authority predicts that state revenue from super-profits will continue to rise from now on. Tax collection forecasts for 2023 are $300-390 million, $360-470 million for 2025, and $1.5 billion for 2030.
Published by Globes, Israel business news – en.globes.co.il – September 12, 2022.
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