New Mining Tax in Israel

October 21, 2014 Taxation in Israel

JERUSALEM – Mining companies in Israel may see as much as half of their incomes taxed away, if the suggestions raised by a government committee are approved.

On October 20th the government appointed Sheshinski Committee issued a new report proposing changes to the taxation of profits earned from mining activities in Israel, suggesting that a new progressive tax of between 25 percent and 42 percent on profits.

The tax was recommend to be charged at a rate of 25 percent after the activities of the company reach an annual return on investment of 14 percent, rising to a maximum rate of 42 percent when profits rise enough to attain a return on investment of 20 percent or higher.

The currently active royalty rate will be set at a uniform rate of 5 percent, compared to the current variable rate of between 2 percent and 10 percent.

It is estimated that if the tax changes are implemented the government will take between 46 percent and 55 percent of the profits raised by mining companies, compared to the current level of approximately 23 percent.

Photo By: Bert Kaufmann