Fossil Fuel Support - ISR
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ISRAEL: GENERAL METADATA

DATA DOCUMENTATION

GENERAL NOTES

Israel’s fiscal year coincides with the calendar year.

PRODUCER SUPPORT ESTIMATE

The oil and gas industry in Israel is regulated by a system of fees, royalty payments and tax deductions developed in the 1950s. The fiscal provisions that are unique to the oil and gas industry are the Oil Law (1952), Oil Regulations (195¬3), Income Tax Ordinance (1961) and some parts of the income tax legislation, especially the Deductions from the Income of Holders of Oil Rights (1956) and the Rules for Calculating Tax for the Holding and Sale of Participation Units in an Oil Exploration Partnership (1988).

Israel started producing natural gas in 2004. As this is a relatively recent development, the issues of producer taxation and royalty payments are currently under review by the government (Knesset), the Ministry of Finance and participants representing the civil society. In April 2010, the Minister of Finance appointed a committee to examine the fiscal framework for the oil and gas resources in Israel, headed by Professor Eytan Sheshinski. The Sheshinski Committee submitted its final conclusions in January 2011. It recommended that the 12.5% rate of royalty payments should remain unchanged since increasing it could have a negative impact on the development of relatively less profitable gas fields. The depletion deduction, however, should be cancelled as it leads to a considerable reduction of the amount of taxable income which has no economic justification, the Committee concluded. The Committee also instituted a progressive oil and gas levy on profits.

The initial rate of the levy is 20%, but it will not be collected before quotient of net cumulative revenues divided by the exploration and development expenses reaches or bypasses 1.5. When this quotient exceeds 2.3, the levy will gradually increase to 50%. Since production from the Tamar field began in 2013, it is projected that the government will only begin collecting revenue from the designated levy in 2018.

In addition, as per income tax calculations, costs that accumulated during the lease stage of the oil-and-gas-asset development will be awarded accelerated depreciation at a rate of 10%. Investments made by the end of 2013 were given a maximum of amount of accelerated depreciation rate of 15%.


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Source: OECD, FFS database, 2015

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Sep-15

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The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

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Fiscal Year starts on 1 July

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New Israeli Sheqel
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Indicator

PSE: Producer Support Estimate

GSSE: General Services Support Estimate

CSE: Consumer Support Estimate

Stage

EXTRACT: Extraction or mining stage

TRANS: Transportation of fossil fuels (e.g., through pipelines)

REFIN:Refining or processing stage

GENER: Use of fossil fuels in electricity generation

INDUS: Use of fossil fuels in the industrial sector

END: Other end uses of fossil fuels

Statutory or Formal Incidence

consumption: Direct consumption

returns: Output Returns

income:Enterprise Income

inputs: Cost of Intermediate Inputs

labour: Labour

land: Land and natural resources

capital: Capital

knowledge: Knowledge

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Database
published : September 2015


These tables are a complement to the report Inventory of Estimates Budgetary Support and Tax Expenditures for Fossil Fuels 2015. They comprise the summary of fossil fuels support expenditures for OECD and BRIICS countries.

Complete documentation by country is available at:

Fossil Fuel Support - ISRAbstract



ISRAEL: GENERAL METADATA

DATA DOCUMENTATION

GENERAL NOTES

Israel’s fiscal year coincides with the calendar year.

PRODUCER SUPPORT ESTIMATE

The oil and gas industry in Israel is regulated by a system of fees, royalty payments and tax deductions developed in the 1950s. The fiscal provisions that are unique to the oil and gas industry are the Oil Law (1952), Oil Regulations (195¬3), Income Tax Ordinance (1961) and some parts of the income tax legislation, especially the Deductions from the Income of Holders of Oil Rights (1956) and the Rules for Calculating Tax for the Holding and Sale of Participation Units in an Oil Exploration Partnership (1988).

Israel started producing natural gas in 2004. As this is a relatively recent development, the issues of producer taxation and royalty payments are currently under review by the government (Knesset), the Ministry of Finance and participants representing the civil society. In April 2010, the Minister of Finance appointed a committee to examine the fiscal framework for the oil and gas resources in Israel, headed by Professor Eytan Sheshinski. The Sheshinski Committee submitted its final conclusions in January 2011. It recommended that the 12.5% rate of royalty payments should remain unchanged since increasing it could have a negative impact on the development of relatively less profitable gas fields. The depletion deduction, however, should be cancelled as it leads to a considerable reduction of the amount of taxable income which has no economic justification, the Committee concluded. The Committee also instituted a progressive oil and gas levy on profits.

The initial rate of the levy is 20%, but it will not be collected before quotient of net cumulative revenues divided by the exploration and development expenses reaches or bypasses 1.5. When this quotient exceeds 2.3, the levy will gradually increase to 50%. Since production from the Tamar field began in 2013, it is projected that the government will only begin collecting revenue from the designated levy in 2018.

In addition, as per income tax calculations, costs that accumulated during the lease stage of the oil-and-gas-asset development will be awarded accelerated depreciation at a rate of 10%. Investments made by the end of 2013 were given a maximum of amount of accelerated depreciation rate of 15%.


http://www.oecd.org/site/tadffss/http://www.oecd.org/site/tadffss/Country notesftp://agrpub:public@ftp.oecd.org/FFS2015/ISR_country overview.pdfSourcesftp://agrpub:public@ftp.oecd.org/FFS2015/ISR_sources.pdf
Contact person/organisation

ffs.contact@oecd.orgmailto:ffs.contact@oecd.orgName of collection/source

Source: OECD, FFS database, 2015

Unit of measure usedNew Israeli SheqelPeriodicity

Fiscal Year starts on 1 July

Date last updated

Sep-15

Other data characteristics

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Key statistical concept

Indicator

PSE: Producer Support Estimate

GSSE: General Services Support Estimate

CSE: Consumer Support Estimate

Stage

EXTRACT: Extraction or mining stage

TRANS: Transportation of fossil fuels (e.g., through pipelines)

REFIN:Refining or processing stage

GENER: Use of fossil fuels in electricity generation

INDUS: Use of fossil fuels in the industrial sector

END: Other end uses of fossil fuels

Statutory or Formal Incidence

consumption: Direct consumption

returns: Output Returns

income:Enterprise Income

inputs: Cost of Intermediate Inputs

labour: Labour

land: Land and natural resources

capital: Capital

knowledge: Knowledge

Recommended uses and limitations




Database
published : September 2015


These tables are a complement to the report Inventory of Estimates Budgetary Support and Tax Expenditures for Fossil Fuels 2015. They comprise the summary of fossil fuels support expenditures for OECD and BRIICS countries.

Complete documentation by country is available at: