Orbotech Share Price was hit by Tax Investigation
23 May, 2017
ITA claims that Orbotech has gained more than $10 million interest from a loan to its Belgian subsidiary during 2005-20012 - but failed to report the income
Orbotech’s share price in NASDAQ dropped by approximately $3 following the announcement of the Israel Tax Authority (ITA) that it conduct an investigation of Company’s auditing for the fiscal years 2012-2014. On May 21, 2017, the Company received a best judgment tax assessment from the ITA with respect to this period, which challenges the Company’s positions on several issues and reach about NIS 207 million (currently approximately U.S. $58 million).
One day later, on Monday this week (May 22, 2017), ITA’s investigators collected document at the Company’s headquarters in Israel and at the office of Keselman & Keselman (PwC Israel) who acts as the Company’s tax consultant. Several of the Company’s employees, including VP Finance, Tal Opher were being questioned, as well as Avishay Bardugo, a tax consultants from the Company’s independent registered accounting firm PwC Israel.
Hidden Loan to a Subsidiary
According to the ITA investigators, one of the issues relates to a $20 million loan that was given to Orbotech’s subsidiary in Belgium, Orbotech S.A. ITA claims that Orbotech has gained more than $10 million interest from this loan during 2005-20012 – but failed to report the income. Amichai Steimberg, President and Chief Operating Officer of Orbothech, published a notice with a warning: “Based on the advice of its tax consultants, the Company believes that it has strong arguments to dispute the positions taken by the ITA in the Assessment and intends vigorously to contest the Assessment in accordance with Israeli law.
“However, given that the process is in its preliminary stages, the Company cannot assure the outcome or timing of completion of the process, including the amount of tax ultimately payable related to 2012-2014 and prior fiscal years, and additional taxes, penalties, criminal sanctions, fines and other amounts may be imposed as a result of the Assessment and investigation, which may be material in amount or in adverse impact on the Company’s results of operations, financial position and reputation. The outcome may also impact the Company’s results of operations as a result of tax positions taken for subsequent fiscal years.”
Orbotech (NASDAQ: ORBK) from Yavne, Israel, is a leading global supplier of process solutions for the manufacture of electronics products. The Company’s core business lies in enabling electronic device manufacturers to inspect and understand PCBs and FPDs to verify their quality; pattern the desired electronic circuitry on the relevant substrate and perform three dimensional shaping of metalized circuits on multiple surfaces; and utilize advanced vacuum deposition and etching processes in SD and semiconductor manufacturing. For more information, visit http://www.orbotech.com.
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