Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 243

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 10
Chunk 243
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itted
Intangible Assets from a foreign company for more than NIS 500 million will be eligible for these benefits for at least ten years, subject
to certain approvals as specified in the Investment Law.

Dividends distributed to Israeli shareholders by a Preferred Technology
Enterprise or a Special Preferred Technology Enterprise, paid out of Preferred Technology Income, are generally subject to withholding
tax at source at the rate of 20% (in the case of non-Israeli shareholders subject to the receipt in advance of a valid certificate from
the ITA allowing for a reduced tax rate of 20% or such lower rate as may be provided in an applicable tax treaty). However, if such dividends
are paid to an Israeli company, no tax is required to be withheld. If such dividends are distributed to a foreign company that holds solely
or together with other foreign companies 90% or more in the Israeli company and other conditions are met, the withholding tax rate will
be 4%.

From time to time, the Israeli Government has discussed reducing
the benefits available to companies under the Investment Law. The termination or substantial reduction of any of the benefits available
under the Investment Law could materially increase our tax liabilities.

72

Tax Benefits under the 2021 Amendment

An amendment to the Investment Law that became effective on August
15, 2021, generally referred to as the 2021 Amendment, introduced a new dividend distribution ordering rule to cause the distribution
of earnings that were tax-exempt under the historical Approved or Beneficial Enterprise regimes (Trapped Earnings), to be on a pro-rata
basis from any dividend distribution, which is applicable to distributions starting from August 15, 2021 and onwards. Generally, distribution
of Trapped Earnings is resulting in corporate tax liability in respect of the amount of the dividend (grossed-up to reflect the pre-tax
income that it would have had to earn in order to distribute the dividend) at the corporate tax rate which would have otherwise been applicable
(‘corporate tax claw-back’). Accordingly, the corporate income tax claw-back will apply to any dividend distribution, as long
as the company has Trapped Earnings. As of December 31, 2024, Tower has no Trapped Earnings.

OECD’s BEPS Initiative

In December 2021, the OECD released Pillar Two model rules, which
impose on large multinational corporations, with revenue above €750 million, a minimum effective corporate income tax rate of 15%
in each jurisdiction