The US Internal Revenue Service (IRS) is demanding that Scitex pay $30-40 million in taxes owed for 1992-96. Scitex is negotiating to conclude the matter, and anticipate a response from the IRS in the coming months.
Internal Revenue Service The Digital Daily
Sources inform the Israeli business newspaper, the ”Globes”, that the US Internal Revenue Service (IRS) is demanding Scitex (Nasdaq: SCIX) pay $30-40 million in taxes owed for 1992-96.
Scitex is currently traded at a market value of $150 million (remember the days when it was ten time [x10] that?). Scitex paid $20 million in taxes in the fourth quarter of 2001, when it posted a loss of $35.8 million. Scitex CFO Yahel Shachar estimates the company has reserves to cover future tax payments. “We have an additional $22 million allowance that should cover all tax matters, said Shachar. “We are negotiating to conclude the disagreement with the IRS. At issue are Scitex’s activities in the US a few years ago, when those activities were quite extensive. We are negotiating to conclude the matter, and anticipate a response from the IRS in the coming months.”
Capital market sources believe the matter raises some disturbing questions. Such high liabilities for previous years raises questions about the legitimacy of Scitex’s tax planning and the accuracy of the company’s financial reports for the relevant years. “We are not conducting investigations or witch-hunts,” said Shachar. “I am not taking the matter lightly. We are taking it very seriously. There is a very serious team in the US dealing with it. We are checking every figure and number in order to calculate the subsidiary’s liability. It should be remembered that there were substantial profits in those years, which created high tax differences.”
Source: Avishai Ovadya, The Globes, 12.03.2002 16:54
