After years of languishing below the NIS 1 billion threshold, Israel’s sovereign wealth fund is nearly at NIS 2 billion. In June this year, The Israeli Citizens’ Fund began operating after the levies it collected passed the NIS 1 billion minimum. Now, three months later, total collection is close to NIS 2 billion.
The Israel Tax Authority has published a forecast for collection of the levy on profits from gas and oil industry and super-profits on natural resources, showing that total collection up to August 31, 2022 was NIS 3.84 billion, of which NIS 1.88 billion was final.
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Levies that are not final are amounts paid as advances or as withholding tax during the tax year. After the end of the tax year, the actual levy owing is calculated in the company’s financial statements and becomes final.
The local gas partnerships pay several kinds of tax to the state on their revenues and on gas production: Companies Tax, like any other company; royalties on the production of gas from publicly-owned natural resources, calculated on the basis of the amount of gas produced; and a levy on super-profits (the “Sheshinski tax” after Professor Eytan Sheshinski who headed the committee that recommended the tax), on the basis of which The Israeli Citizens’ Fund was set up.
Every quarter, the Israel Tax Authority transfers to the Accountant General in 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 to The Israeli Citizens’ Fund the final amounts, plus profits or minus losses, after converting them to foreign currency.
Figures published by the Ministry of National Infrastructures, Energy and Water Resources show that in the first half of 2022, royalties on production of natural gas and minerals jumped 50% to NIS 829 million. The rise was thanks to record production from the Leviathan and Tamar gas reservoirs in the first half year, and a rise in the shekel-dollar exchange rate.
Ministry of Finance figures show that NIS 700 million was paid into The Israeli Citizens’ Fund in August alone.
The Israel Tax Authority forecasts that state revenues from super-profits will continue to rise from now on. The forecast for collection of the levy for 2023 is $300-390 million, for 2025 $360-470 million, and for 2030 $1.5 billion.
Published by Globes, Israel business news – en.globes.co.il – on September 12, 2022.
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