Israel’s Citizens Fund (sovereign wealth fund) began operating at the end of June 2022 and the Israel Tax Authority reports that the fund now has NIS 4.5 billion, including finalized levies exceeding NIS 2 billion shekels. Total state revenues from natural resources in 2022 amounted to NIS 4.54 billion. In 2022, NIS 3.28 billion levies were collected – 2.6 times the total of all levies collected cumulatively until the beginning of 2023. A total of NIS 1.59 billion of these levies were finalized this year (a final amount that cannot be contested) – 3.6 times the total of all finalized levies accumulated until the beginning of this year.
Non-finalized levies are collected as advances or withholding during the tax year and their collection is not yet final. After the end of the tax year, according to the amount of the levy that will be calculated in the annual report that will be submitted, the levy becomes, in whole or in part, forfeited.
Definitive levies are collected according to annual reports submitted by the owners of the oil and natural resources rights, as well as levies collected following a final assessment.
Long-term economic vision
Each quarter, the Israel Tax Authority transfers the collected levies (finalized and non-finalized) to the Accountant General at the Ministry of Finance. The Accountant General manages the levies for an interim period until they are finalized, and transfers the finalized amount together with the investment profits (or minus the losses from them) to the Sovereign Wealth Fund for the citizens of Israel once a quarter, after they have been converted to foreign currency.
The levies for excess profits from gas and natural resources are collected in accordance with the law on taxation of profits from natural resources. According to this law, the funds received from the levies will be managed in accordance with the provisions of the Israel Sovereign Citizens Fund Law. The purpose of the fund is to manage the state’s revenues from the levy on profits from natural resources with a long-term economic vision in order to bring profit and with the aim of enabling the continued existence of the fund for future generations.
In addition to the levies on gas profits and excess profits from natural resources designated for the fund for the Sovereign Wealth Fund, gas rights holders and natural resource rights holders also pay income tax and royalties, which go into the state budget on a routine basis.
The Sovereign Wealth Fund was launched in June 2022, about four years after the original date set for its operation in 2018. The fund’s start date was postponed several times due to lower than expected revenues from some of the reserves in previous years. The passing of the NIS 1 billion mark of the levies in 2021 was mainly due to the levies of gas profits for 2021 paid by the owners of the rights in the Tamar prospect. These levies were added to gas profit levies paid starting in 2011 by the owners of the rights in the Ashkelon (Yam Tethys) field.
Published by Globes, Israel business news – en.globes.co.il – on January 24, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.
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