Company: TSEM
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001178913-25-001537
Chunk: 112

Company: TOWER SEMICONDUCTOR LTD
Filing Date: 2025-04-30
Form: 20-F
Item: Item 3
Chunk 112
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7, generally referred to as the 2017
Amendment. The 2017 Amendment provides new tax benefits for two types of “ Preferred Technology Enterprises,” as described
below, and is in addition to the other existing tax beneficial programs under the Investment Law.

The 2017 Amendment provides that a technology company satisfying
certain conditions will qualify as a “ Preferred Technology Enterprise” and will thereby enjoy a reduced corporate tax rate
of 12% on income that qualifies as “ Preferred Technology Income”, as defined in the Investment Law. The tax rate is further
reduced to 7.5% for a Preferred Technology Enterprise located in development Zone A. In addition, a Preferred Technology Enterprise will
enjoy a reduced corporate tax rate of 12% on capital gain derived from the sale of certain “ Benefitted Intangible Assets”
(as defined in the Investment Law) to a related foreign company if the Benefitted Intangible Assets were acquired from a foreign company
on or after January 1, 2017 for at least NIS 200 million, and the sale receives prior approval from the IIA.

The 2017 Amendment further provides that a technology company satisfying
certain conditions (group turnover of at least NIS 10 billion) will qualify as a “ Special Preferred Technology Enterprise”
and will thereby enjoy a reduced corporate tax rate of 6% on its “ Preferred Technology Income” regardless of the company’s
geographic location within Israel. In addition, a Special Preferred Technology Enterprise will enjoy a reduced corporate tax rate of 6%
on capital gain derived from the sale of certain “ Benefitted Intangible Assets” to a related foreign company if the Benefitted
Intangible Assets were either developed by the Special Preferred Technology Enterprise or acquired from a foreign company on or after
January 1, 2017, and the sale received prior approval from the IIA. A Special Preferred Technology Enterprise that acquires Benefitted
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