The Tamar natural gas field, the Leviathan structure, and other offshore gas fields should be eligible for tax breaks as strategic enterprises, states a position paper written by Adv. Dan Bein and Adv. Itzik Benasher for Delek Group Ltd. (TASE: DLEKG) and its gas exploration subsidiaries.
Strategic enterprise status grants companies owning the gas fields a full exemption from the companies tax and taxes on dividends for seven years. Bein and Benasher wrote that the government cannot retroactively raise taxes on gas discoveries. The position paper will be submitted to the Sheshinsky committee in a few days.
"We are not demanding this at this time. In principle, the gas reserves are located in an area which could be eligible for very large tax breaks, at least according to our interpretation," Bein told "Globes". "Obviously, as with every interpretation, ours is open to argument."
Bein, who served as deputy president of the Haifa District Court until 2002, is an expert on administrative and tax law. He said that the idea of tax breaks for the natural gas fields came up at his firm.
Bein said that the findings have not yet been written up as a full legal opinion. "However, we believe that it is possible in principle to receive strategic enterprise status," he said. His opinion is based on the concept of "eligibility area" in the Law for the Encouragement of Capital Investments.
The gas fields apparently also meet the threshold condition of investment to develop them - NIS 900 million, or NIS 600 million for an enterprise in an eligibility area. Another condition stipulates that to be eligible for a tax break, the gas producer must have at least NIS 20 billion in revenue or at least NIS 13 billion for a company in an eligibility area.
Published by Globes [online], Israel business news - www.globes-online.com - on November 2, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010