Teva has agreed to pay $750 million over the next five years to settle litigation with Israel’s tax authorities.
The deal settles all pending disputes over the Israel-based company’s taxes payable between 2008 and 2020, Teva announced on Tuesday. It includes $500 million in corporate back taxes on earnings that Teva previously considered to be tax-exempt under an Israeli law. An additional $250 million will be paid in relation to “additional disputed tax issues in the aforementioned taxable years,” according to a securities filing.
Israel’s tax authorities issued multiple “tax assessment decrees” challenging Teva on “several issues” between 2008 and 2020. The issue made it all the way to the Israeli Supreme Court, which held a hearing on the some of the decrees in March, according to Teva’s first-quarter earnings report.
The recent settlement “allows Teva to end this historical income tax issue,” the company said in a news release, while bringing attention back to its “pivot to growth” strategy. That strategy has involved manufacturing site closures, a shift away from lower-margin generics, and focusing more attention on its innovative portfolio. Following years of decline, CEO Richard Francis told investors in May that the first quarter of 2024 marked Teva’s fourth consecutive quarter of revenue growth.
Teva said the tax settlement won’t affect its 2024 financial guidance.
“As a global Israeli company, with its headquarters based in Israel, Teva is deeply committed to the State of Israel and the Israeli ecosystem and is proud of its contribution and role in the country’s economy,” Teva said in the news release.