Money In, Money Out




Israel has 'shepped naches' (taken pride) in the sale of home-grown navigation app Waze to Google for a stunning $1.1B.

Prime Minister Netanyahu called Waze owner Noam Bardin saying:

“Congratulations, you reached your destination! You put Israeli technology on the global map! You are also contributing to state coffers, which is welcome at this time. I am waiting for your next start-up! You have done exceptional work.”

In the same week, with a lot less razmataz, Teva, Israel's leading pharmaceuticals manufacturer, conceded in court that they had infringed Pfizer's patent on the Protonix drug, which is for treating gastroesophageal reflux disease.

Together with fellow patent infringer, Sun, Teva settled for a total fine of $2.15B, of which Teva is required to pay $1.6B.

So, in Bibi's terms, the net "contribution to the State coffers" of the two mega-buck Israeli deals - looks to me like a minus.

The pride, and the shame.

Comments

  1. Bert15 June 2013 at 10:14

    I don't understand your math. How much of Teva's $1.6b was going to be paid as tax? Is that more than the tax that Waze and it's employees are going to pay as a result of the acquisition?

    ReplyDelete
  2. David Morris15 June 2013 at 21:36

    Hi Bert - Good question - but I'm not a tax consultant.

    And my own tax experience, unfortunately, hasn't run into the $b issues...

    I guess the tax on Waze $1.1b is capital gains tax (25%?. Whereas the $1.6b payment would be a business expense, and be knocked off the profits of Teva - which would be taxed as Corporation Tax - which I think is higher (40%?).

    Any tax expert is welcome to chip in with their assessment as to whether the State of Israel is winning or losing overall on the two deal?

    ReplyDelete
  3. Reb Ari15 June 2013 at 23:19

    Don't forget that Teva didn't pay anywhere near 40% tax this year!!

    ReplyDelete

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