01—Abstract
Summary
Summary of the 8-K filed June 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Teva Pharmaceutical Industries Limited entered into an agreement on June 23, 2024 with the Israeli Tax Authorities (ITA) to settle certain litigation over taxes payable for its taxable years 2008 through 2020.
Under the agreement, Teva will pay a total of approximately $750 milliona to the ITA over 2024 through 2029. The company may prepay, and payments over time are subject to interest and inflation adjustment. The total comprises approximately $500 million in corporate taxes on historical earnings previously considered exempt under the Encouragement for Capital Investment Law, and approximately $250 million in corporate taxes on other disputed tax issues for the same years.
The agreement also includes a forward-looking obligation: if Teva pays dividends on, or repurchases, its equity interests, it will pay an additional 5%-7% of the amount of such dividends or repurchases in corporate taxes, up to a maximum of approximately $500 millionb. This linkage means shareholder distributions would carry an incremental tax cost beyond the fixed settlement payments.
The filing describes the agreement under Item 1.01 (Entry into a Material Definitive Agreement). The filing states that a full English summary of the agreement will be filed with the company's Form 10-Q for the quarter ending June 30, 2024.
02—Key points
Key Highlights
- Teva agreed on June 23, 2024 to settle litigation with the Israeli Tax Authorities covering taxable years 2008 through 2020.
- Total settlement payment of approximately $750 million, payable over 2024 through 2029, with the right to prepay.
- About $500 million relates to historical earnings previously considered exempt under the Encouragement for Capital Investment Law.
- About $250 million relates to additional disputed tax issues in the same taxable years.
- Payments are subject to interest and inflation adjustment over time.
- Future dividends or share repurchases will trigger an additional 5%-7% corporate tax payment, capped at approximately $500 million.
- A English summary of the agreement is to be filed with the Form 10-Q for the quarter ending June 30, 2024.
03—Questions
Frequently Asked Questions
What is the total cost of the settlement with the Israeli Tax Authorities?
Teva will pay a total of approximately $750 million to the ITA, spread over 2024 through 2029. This includes about $500 million in corporate taxes on historical earnings previously considered exempt under the Encouragement for Capital Investment Law and about $250 million in corporate taxes on other disputed issues.
Can Teva pay the settlement early, and do the amounts change over time?
The company has the right to prepay. Amounts paid over time are subject to interest and increase for inflation.
Does the settlement affect shareholder returns?
Yes. Under the agreement, if Teva pays dividends on or repurchases its equity interests, it will pay an additional 5%-7% of the amount of those dividends or repurchases in corporate taxes, up to a maximum tax payment of approximately $500 million.
Which tax years does the agreement cover?
The agreement settles litigation over taxes payable for Teva's taxable years 2008 through 2020.
Where can investors find the full terms of the agreement?
The filing states that the English summary of the agreement will be filed with the Company's Form 10-Q for the quarter ending June 30, 2024.
04—Continue