Tax Authority to order Teva to pay NIS 200M
Tax Authority to slap pharmaceuticals giant with assessment order pertaining to its 2005 activity
The orders, which deal with the company's activity in 2005, are to be dealt by the Jerusalem District Assessing Officer. Calcalist learned that the Authority rejected Teva's claims in the matter, deferring the case to the district court.
Calcalist reported last month that the Tax Authority issued an assessment order requiring Teva to pay NIS 2.7 billion ($730 million). The assessment from 2006 sets forth claims regarding numerous issues under dispute between Teva and the Authority relating to the Law for the Encouragement of Capital Investment. The Tax Authority has a one-year deadline to serve the order for the assessment in question.
Bones of contention
The assessment addresses, among other issues, Teva's alleged aggressive tax planning in its overseas holdings structure. The Tax Authority claims that a Singapore-based company transferred tax-exempt dividends to Israel. Another bone of contention is the claim that Teva used profits from an approved enterprise to acquire overseas companies in violation of the law which stipulates that funds must remain within the company.
A senior source within the Tax Authority told Calcalist that due to the complexity of the matter, a committee of senior officers was appointed to discuss the issuance of the assessment. The committee examined whether the Authority's claims can be upheld in court and decided to go ahead with the case.
Teva denied the charges in January.
"The Tax Authority's claim is based on the groundless notion that the acquisition of companies by Teva is akin to the distribution of dividends liable to tax to shareholders," Teva told Calcalist. "In Teva's opinion, and in line with the analysis of leading tax experts, this is a misinterpretation of the law which will be quashed by any court if and when it is brought before them. Moreover, according to the opinion in our hands, there is no obligation to make financial provisions for this assessment."
Teva did not respond to the latest reports.
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