Israel’s Sovereign Wealth Fund, which is likely to accrue hundreds of billions of shekels in the coming year for the welfare of the country from taxing the surplus profits from the offshore gas fields, will begin operating in mid-2022, Trend reports with reference to Globes.
The Sovereign Wealth Fund had been scheduled to operate from 2018 but was postponed several times, among other things because of lower than expected revenue from some of the fields in recent years.
The Israel Citizens’ Sovereign Wealth Fund is supposed to accrue all the government revenues from the surplus profits tax on gas fields since 2011 (Sheshinski I Committee) and the revenues from surplus tax imposed on natural resources producers since 2015, including potash, bromine, magnesium and potassium (Sheshinski II).
To date the Israel Tax Authority has collected an absolute amount NIS 577 million in levies from gas and natural resources surplus profits. Exceeding the NIS 1 billion threshold, a precondition for setting up the Sovereign Wealth Fund is expected, mainly due to the levies on gas profits that will be paid by the Tamar partners in 2021.
The Israel Citizens Sovereign Wealth Fund Law was enacted in 2014. The Law states that the Fund will manage the state’s levies from a long-term economic perspective in order to maximize the fund for the support of future generations.
According to the Law, the Fund can distribute up to 3.5% every year of its income for social, economic and educational aims, according to proposals submitted by the government and subject to approval by the Fund’s institutions, headed by a council.
