Teva Pharmaceutical Industries broke all records for receiving tax benefits in Israel, a total of 6.4 billion shekels during the years 2012-13, according to Globes citing Israel Tax Authority data on Tuesday.
For that period, Teva “enjoyed an effective tax rate of 0 percent, at least on Copaxone,” its flagship multiple sclerosis treatment. The operating profit on Copaxone has been more than $3 billion in recent years, and in effect the entire amount was completely tax free up to 2013, the paper said.
Other leading beneficiaries of the tax laws mentioned were Israel Chemicals, which in the past two years received benefits totaling NIS 830 million. And Check Point Software Technologies which gets hundreds of millions of shekels in breaks annually.
The big tax breaks are justified by the contribution that companies such as Teva bring to the Israeli economy. In terms of employment, for example, Teva points out that it employs more than 7,000 workers in Israel, almost a third of them in the periphery, and that the number on the payroll has grown over the years.
The pharmaceutival giant stresses that it is also connected to suppliers and contractors that employ more than 40,000 people in Israel, that its exports have been worth $140 billion in the past decade, that it makes an important contribution to economic growth, and that exports of drugs account for about 15% of Israel’s total industrial exports excluding diamonds.
Teva said in response to the report, “Teva has paid and pays taxes according to law. The tax benefits that Teva received were and remain within the framework of the Law for the Encouragement of Capital Investments that applies to every company in the economy that meets the criteria. The tax rate under the Law for the Encouragement of Capital Investments was updated in 2014 and currently stands at 9%, substantially increasing the tax rate that applies to the company’s income that falls within the provisions of this law. On the rest of its earnings, Teva pays companies tax at the full rate.