Special Dividend to be paid on December
28
Taro Pharmaceutical Industries Ltd. (NYSE:TARO) (“Taro” or the
“Company”) announced today an explanation regarding taxation on the
$500 million Special Dividend payable on December 28, 2018 to
shareholders of record at the close of business on December 11,
2018. The ex-dividend date will be December 10, 2018.
Following the announcement by the Company on November 5, 2018,
that it will pay a $500 million dividend (the “Dividend”) on
December 28, 2018, and in accordance with a specific tax ruling
that the Company has received from the Israeli Tax Authority
("ITA"), the Company would like to elaborate about the procedures
whereby Israeli taxes will be withheld from the Dividend payment,
based on conditions set by the ITA in the tax ruling.
Neither the Company nor its Tax Trustee will provide tax advice
to shareholders regarding their substantive tax liability or their
ability to claim a refund of Israeli withholding tax. Shareholders
should consult their own tax advisors as to the United States,
Israeli or other tax consequences of the payment of the Dividend
and the impact of any foreign, state or local taxes.
This press release will be filed with the Securities and
Exchange Commission on Form 6-K and will also be accessible on
Taro’s website at www.taro.com.
Attached is a sample of the letter to be distributed Taro
shareholders subsequent to the record date.
SAFE HARBOR STATEMENT
Certain statements in this release are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements include, but are not limited
to, statements that do not describe historical facts or that refer
or relate to events or circumstances the Company “estimates,”
“believes,” or “expects” to happen or similar language, and
statements with respect to the Company’s payment of the Special
Dividend, Israeli taxes withheld from the Dividend payment, and
potential to receive a claim for reduced rate of withholding tax.
Although the Company believes the expectations reflected in such
forward-looking statements to be based on reasonable assumptions,
it can give no assurances that its expectations will be attained.
Factors that could cause actual results to differ include general
domestic and international economic conditions, industry and market
conditions, changes in the Company's financial position, litigation
brought by any party in any court in Israel, the United States, or
any country in which Taro operates, regulatory and legislative
actions in the countries in which Taro operates, and other risks
detailed from time to time in the Company’s SEC reports, including
its Annual Reports on Form 20-F. Forward-looking statements are
applicable only as of the date on which they are made. The Company
undertakes no obligations to update, change or revise any
forward-looking statement, whether as a result of new information,
additional or subsequent developments or otherwise.
About Taro
Taro Pharmaceutical Industries Ltd. is a multinational,
science-based pharmaceutical company, dedicated to meeting the
needs of its customers through the discovery, development,
manufacturing and marketing of the highest quality healthcare
products. For further information on Taro Pharmaceutical Industries
Ltd., please visit the Company’s website at www.taro.com.
**Taro Shareholder Letter Follows**
December 7, 2018
Dear Taro Shareholder,
Re: Taxation of the Dividend Payable on
December 28, 2018
Following the announcement by Taro Pharmaceutical Industries
Ltd. (the “Company”) on November 5, 2018 that it will pay a
$500 million dividend ( the “Dividend”) on December 28, 2018
and in accordance with a specific tax ruling that the Company has
received from the Israeli Tax Authority ("ITA"), we would
like to elaborate about the procedures whereby Israeli taxes will
be withheld from the Dividend payment, based on conditions set by
the ITA in the tax ruling (the "ITA Conditions"):
- The Company has appointed IBI Trust
Management, located at Ehad Ha’am 9 Tel Aviv (Shalom Tower); e-mail
address IBI-CM@IBI.co.il; phone number +972 506 209
410 as its trustee/ sub-paying agent (the "Tax
Trustee"), in compliance with the ITA Conditions.
- On the dividend payment date, December
28, 2018, the Company shall withhold 15.09% (the "Withheld Tax
Rate") of the gross amount of the Dividend. The Company shall
transfer such amount to the Tax Trustee by January 1, 2019. The
remaining amount of the Dividend (84.91%) shall be paid to
shareholders by the American Stock Transfer & Trust Company,
LLC (the Company’s stock transfer agent) or the relevant broker for
shares held in street name.
- Any shareholder of the Company who is:
(i) a resident of a country with which Israel has a treaty for the
avoidance of double taxation and (ii) has an equitable right to
receive the Dividend (an "Applicant"), may apply to the Tax
Trustee, from the Dividend payment date until February 14, 2019,
and request that the withholding tax rate that shall apply to his
share of the Dividend payment be reduced in accordance with a
relevant tax treaty (the "Application").It is important to
note that only residents of countries that have a treaty with
Israel that provides for a tax rate that is lower than the Withheld Tax Rate should
file an Application for reduced withholding. In general, the treaty
between Israel and the U.S. provides for a
higher tax rate than the Withheld Tax Rate, so there
would generally not be a reason for US resident shareholders of the
Company to submit an application. The treaties between Israel and
some other countries (including, but not limited to, Germany,
France, the UK and China) generally provide for a withholding tax
rate that is lower than the
Withheld Tax Rate so residents of such countries should consider
whether they want to submit an Application.
- In order to submit an Application, the
Applicant shall submit to the Tax Trustee the documents listed in
Attachment A.
- The Tax Trustee shall review all of the
Applicant's documents, as well as any other document which may be
required in order to establish the Applicant's eligibility for a
reduced tax rate. If an Applicant’s documents are insufficient, the
Tax Trustee may revert to the Applicant with questions or requests
for additional documents.
- Upon an Applicant’s satisfactory
submission of the required documents, the Tax Trustee shall
transfer to the Applicant’s designated bank account a tax refund in
the amount by which the Withheld Tax Rate exceeds the tax rate
actually due from the Applicant under the applicable tax
regime.
- The above-mentioned application process
is only a "fast track" that has been made available to shareholders
to avoid an excessive tax withholding that exceeds the tax that
should have been withheld from their Dividend payments based on
their entitlement to the benefits of a tax treaty. It neither
affects, in any way, the substantive tax liability of any
shareholder nor does it derogate from a shareholder’s right to file
a tax return with the Israeli tax authority to seek a refund of
over withheld amounts.
Neither the Tax Trustee nor the Company will provide tax
advice to Applicants regarding their substantive tax liability or
their ability to claim a refund of Israeli withholding tax.
Applicants should consult their own tax advisors as to the United
States, Israeli or other tax consequences of the payment of the
Dividend and the impact of any foreign, state or local
taxes.
Appendix
A
Taro Pharmaceutical Industries Ltd.
Dividends Distribution
CLAIM FOR REDUCED RATE OF WITHHOLDING
TAX
IN ISRAEL ON DIVIDEND PAYMENTS TO A
NON-ISRAELI TAX RESIDENT
You are receiving this form "Declaration of Status for Israeli
Income Tax Purposes" as a holder of ordinary shares (the
"Shares") of Taro Pharmaceutical Industries Ltd.
(“Taro”), in connection with the payment of a special cash
dividend to the shareholders of Taro which will be paid in December
2018.
By completing this form in a manner that would substantiate your
eligibility for a reduced rate of Israeli withholding tax with
respect to this dividend distribution, you will allow Taro and its
Israeli tax agent to withhold tax in Israel from the dividend
distribution made to you at a reduced tax rate.
This form shall be completed and signed by the recipient of the
dividend or by an authorized officer or representative of the
recipient.
This claim is made pursuant to the Double Tax Convention between
Israel and the country of residence of the recipient of the
dividend.
PART A: RECIPIENT
DECLARATION
RECIPIENT INFORMATION
Full name of the recipient:
For Individuals:Identity Number,
SocialSecurity No., or Passport No.
_______________________For Legal
Entities:Registration No. /Corporation
No._______________________
Type of Investor:Legal Entity ❏Individual
❏Trust Beneficiary ❏
With respect to an individual With respect to a legal
entity
Date of birth:
_______________________
The country in which it was
incorporated:_______________________
The country in which control and
management are conducted:_______________________
Country of residence:
_______________________
Country of citizenship:
_______________________
Country issuing passport:
_______________________
Income Tax File or tax identification
number of the recipient in place of residence:
__________________
Address of local income tax assessing
office in recipient’s place of residence:
The recipient is a fiscal resident of
(insert country) _____________________________ since (insert
date)________________.
Permanent Address (country, city, street,
house or apartment number):
Mailing Address:
Investor's Telephone number:
Telephone number of authorized
signatory:
With regard to an Individual:
I declare that I am not an Israeli resident because (please
mark all applicable boxes):
❏
1. The State of Israel is not my permanent place of
residence.
❏
2. The State of Israel is neither my place of
residence nor my family's place of residence.
❏
3. My ordinary or permanent place of activity is not
within the State of Israel, and I do not have a permanent
establishment in the State of Israel.
❏
4. I do not engage in any occupation within the State
of Israel.
❏
5. I do not own a business or part of a business
within the State of Israel.
❏
6. This year, I did not stay, and I do not intend to
stay in Israel for 183 days or more.
❏
7. This year, I did not stay in Israel and I also do
not intend to stay in Israel for 30 days or more and my total stay
in Israel this year and in the two preceding years will not reach
425 days.
❏
8. I am not insured with the National Insurance
Institute in the State of Israel.
❏
9. I am the sole beneficial owner of the dividend
income.
❏
10. I do not hold the shares directly or indirectly
for the benefit of another person.
❏
11. The income is not attributable to a place of
business or permanent establishment located in a country other than
my country of residence.
With regard to a Legal Entity:
I declare that the Legal Entity is a non - Israeli resident
because (please mark all applicable boxes):
❏
1. Over 75% of the shareholders are individuals with
the same residency as the Legal Entity (attach a declaration of
shareholders)
❏
2. It is not registered /incorporated with the
Registrar of Companies in Israel.
❏
3. It is not registered with the Registrar of
non-profit organizations in Israel. (Amutot)
❏
4. The control of the legal entity is not in Israel.
❏
5. The management of the legal entity is not in
Israel.
❏
6.
The legal entity does not have a permanent
enterprise in Israel and the entity does not have a permanent
establishment in the State of Israel
❏
7.
No Israeli resident holds, directly or
indirectly via shares or through a trust or in any other manner,
alone or with another who is an Israeli resident, one or more of
the means of control of the legal entity, as specified below, at a
rate exceeding 25%. The term "means of control" refers to the
following:(a) the right to participate in
profits;(b) the right to appoint a
director;(c) the right to vote;(d) the
right to share in the assets of the entity at the time of its
liquidation;(e) the right to direct the manner of
exercising one of the rights specified above.
❏
8. The legal entity is the sole beneficial owner of
the dividend income.
❏
9. The entity does not hold the shares directly or
indirectly for the benefit of another person.
❏
10. The income is not attributable to a place of
business or permanent establishment located in a country other than
country of residence.
DETAILS OF INCOME RECEIVED
Place of receipt (country, city, bank account number,
Amount)
Country City Bank name and account
number Amount
The recipient declares that all the information provided above
is accurate and complete.
Date
of Signature Signature of
Recipient
PART B: CERTIFICATION OF FOREIGN INCOME
TAX AUTHORITY1
This part shall be completed and signed by the income tax
authorities of the recipient’s place of residence
1. I certify that:
a. the recipient of the income is a fiscal
resident of (insert country) ____________; according to the tax
treaty between Israel and ________.
b. the recipient regularly reports his income
as required, the most recent income tax return filed being for the
year _____________;
c. the income concerned ❏ is/ ❏ is not
subject to tax in (insert the recipient’s country of residence)
___________________.
Date of Signature
Signature
Official Stamp
2. Address of certifying official:
__________________________________________
3. Position or Title of certifying official:
____________________________________
4. Name of Income Tax Authority official making this
certification: _______________
____________________________________________________________________1
A residency certificate issued by the tax authority of the
Applicant’s country of residence may substitute for this Part
B.
PART C: DOCUMENTATION
Applicants who are Individuals – please attach the
following documents:
- Copy of passport or identity card
issued by the country of tax residency of shareholder.
- Bank or brokerage statement from the
dividend record date including details of the account holder, bank
or brokerage name and account number and the number of listed
shares held by the shareholder.
- Bank or brokerage statement from the
date of payment of the dividend, including details of the account
holder, account number and the amount of the dividend
received.
- Residency certificate issued by the
Applicant’s country of residence for the purposes of the tax treaty
between Israel and the Applicant’s country of residence.
Applicants who are Legal Entities – please attach the
following documents:
- Copy of Certificate of Incorporation
issued by the country of tax residency of shareholder.
- For private companies, (i) a list of
shareholders of the Legal Entity; and (ii) list of the direct and
indirect individual shareholders, their ownership percentages and
declarations regarding their country of residency for tax purposes.
Such list must include at least 75% total ownership of the Legal
Entity.
- For public companies or direct or
indirect subsidiaries of public companies, a statement declaring
the Legal Entity’s country of residence.
- Bank or brokerage statement as of the
dividend record date including details of the account holder, bank
or brokerage name and account number and the number of listed
shares held by the shareholder.
- Bank or brokerage statement as of the
date of payment of the dividend, including details of the account
holder, bank or brokerage account number and the amount of the
dividend received.
- Residency certificate issued by the
Applicant’s country of residence for the purposes of the tax treaty
between Israel and the Applicant’s country of residence.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181207005564/en/
Mariano A. BalaguerVP, CFO(914)
345-9001Mariano.Balaguer@taro.com
William J. CooteAVP, Business Finance, Treasurer and
Investor Relations(914) 345-9001William.Coote@taro.com
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