The Knesset has advanced legislation to compel natural gas companies to deposit money from their profits into Israel’s sovereign wealth fund amid a legal battle over the amount required, The Times of Israel reported on Tuesday.
The Knesset Finance Committee cleared the measure its second and third readings in the plenum.
The companies are currently exempt from making the payments until the legalities are settled, but the MKs are seeking an amendment to the 2011 Petroleum Profits Taxation Law which would secure payment regardless of court appeals, and would give tax authorities enforcement tools, such as fines, in the event of noncompliance.
The legislation is backed by Minister of Science and Technology Orit Farkash-Hacohen (Blue and White), with the backing of Finance Minister Avigdor Liberman of Yisrael Beytenu.
Following the discovery of natural gas reserves off Israel’s Mediterranean coast in the early 2000s, the Knesset passed a law for the creation of a sovereign wealth fund. Companies profiting from Israel’s gas and other natural resources are supposed to pay 50% of their profits into this fund, to be used for the benefit of the Israeli public. This is in addition to 12.5% in royalties and to corporation tax, both of which the companies regularly pay.
The Bank of Israel forecast that by 2022, the fund would have NIS 14.2 billion ($4.3 billion), with around NIS 270 billion (over $82 billion) accruing by 2030.
But the fund has yet to be started because it is still short of the NIS 1 billion ($305 million) which is the minimum for opening it.
According to the Israel Tax Authority, just NIS 741 million ($225.7 million) had entered the fund by the end of June 2021.