Prime Minister Benjamin Netanyahu
Photo: Reuters
Professor Eytan Sheshinski
Photo: Oz Maron
PM backs tax on gas profits
Sheshinski Committee proposes that investors who drill for oil, gas on Israeli territory should pay 20%-60% of profits in taxes. 'Revenue from new system will go to education system,' Netanyahu says
Prime Minister Benjamin Netanyahu
announced on Tuesday that he will implement the recommendations
of the Sheshinski Committee in their entirety.
"This is why I decided to adopt the conclusions of the committee," he stated. "There is no doubt that this resource is a strategic location that the enemies of Israel will try to harm. This is why I decided that Israel will take part in protecting its assets in this project."
Netanyahu told a CEOs conference at the Crown Plaza Hotel in Jerusalem that the committee that reviewed Israel's oil and gas tax policy "has found the right balance between the needs of Israeli citizens, the needs of investors and the incentives that are given to them.
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According to Netanyahu, he intends to establish a fund that will invest the State's revenue from gas and oil in the education system.
The committee, headed by Professor Eytan Sheshinski, proposed that the State should not raise the 12.5% royalty rate that it charges the companies that drill for gas or oil on Israeli territories. Instead, Israel will charge these companies a tax that will amount to 20%-60% of the profits. However, the royalties and profit taxes will not be collected before the investors regain half of their input. The system will not be retroactive.
As per the proposed system, the investors will pay 20% of their profits once they get back 150% of their investment. The tax rate will rise gradually from this starting point, until it reaches 60%, which the investors will pay once they reclaim 230% of its investment and beyond.
Netanyahu has met with representatives of the Finance Ministry, the Sheshinski Committee and investors in order to decide whether to accept the proposal word for word.
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