Yitzchak and Sammy Sagol, who are selling 80 percent of their company, Keter Plastics, to a British venture capital firm, are set to earn $1.4 billion from the deal – and Israel’s taxpayers will earn over a billion shekels from the deal, as well. As Israeli citizens selling an Israel-registered company, the Sagols are subject to various taxes, both personal and business, that they will have to pay.
The current nominal tax on corporate profits is 30 percent, but the total tax to be paid on a deal such as this would take into account the worth of the company over a number of years. The total tax to be paid on the profits is to be negotiated between the brothers and the government, Calcalist reported over the weekend. The Tax Authority is expected to collect over NIS 282 billion in taxes and fees this year.
Other recent exits netted large profits for the owners of the companies, but little for the state. One example is the billion-dollar buyout last year of social-media firm Viber by a Japanese concern. The owners of the company are Israeli, but as Viber was registered in Cyprus (where there is no corporate tax), the income to the state was minimal.
Keter is being bought out by London-based venture capital firm BC Partners. The company, best known for its plastic furniture and kitchen items, is worth $1.7 billion under the deal; BC Partners is buying 80 percent of Keter, based on that value, paying $1.36 billion for its share.
The company is one of the leading producers of plastic furniture for home and garden use in the world. The company has over 4,000 workers in 28 factories worldwide, with 1,500 employees in Israel. Annual revenues last year were about a billion dollars, a 40 percent increase over the previous year.
In a statement, Keter said that the deal was “in advanced stages of negotiations. If and when it is completed, the amount necessary will be paid according to accepted tax principles.”