ICL Israel Chemicals : IMPACT ON STATE ECONOMIES

As one of the three most important companies in Israel, ICL's contribution to the public interest is reflected in a range of aspects: every year, ICL invests huge amounts in developing the industry. ICL is an outstanding exporter which derives about 95% of its revenues from exports. In so doing, it helps the State's balance of payments, ensures the livelihood of some 30,000 families across Israel and serves as the economic backbone of the Negev. ICL invests some $390 million in Israel every year on top of its extensive ongoing operations. Together, these investments help expand the economic activity in Israel and boost its growth. ICL's Impact on the Negev
ICLs' impact on the economy and quality of life in the Negev is far reaching. As the provider of some 30,000 families, most of them from the Negev, ICL is responsible for one fifth of the Negev's economic activity (worth approx. $2.8 billion), and the Company is vital for the economic soundness of this region and for its continued growth. In addition, the impact of Id's work and investment in the Negev influences all the communities of the eastern Negev in multiple areas, including small industrial enterprises, privately-owned businesses, commerce, welfare, education and culture. The contribution of ICL plants in south Israel amounts to 19% of the GDP of the Beer Sheba district (approx. 20% of the economic activity in the Negev) and to 1.5% of the GDP of Israel (2012 figures. Id's contribution to the GDP is $3.0 billion a year, of which approx. $2.8 billion in the Negev). In addition to impacting the Negev's economy, ICL helps the development of tourism to the Dead Sea, enabling the creation of thousands of additional jobs. Without ICL's work, the southern basin of the Dead Sea would have dried out completely, inflicting a deadly blow on the region (see elaboration in the 'Sustainable Management of Mining Operations in the Dead Sea' section, further in the 2014 report). ICL Impact on the State Revenues The Israeli government's take out of ICL revenues is one of the highest rates in the world paid on the production and sale of potash. 'Government take' refers to the total payment the State receives as a result of the Company's operations, including taxes, royalties and additional amounts. As a result of various measures taken by Israel's government (exclusion from the Law for the Encouragement of Capital Investment, funding of the national project for rescuing Dead Sea Hotels, increase of royalties and royalties on industrial products, natural resources taxation, and the recommendations of the Sheshinsky Committee II), the government take from ICL earnings from the production of potash at the Dead Sea will reach 46%-55%. In recent years, ICL has paid approx. $260 million every year and is expected to pay another $386 million a year as a result of the government's decisions. The Government Take (GT) of ICL in 2014 was approx. $291 million (from which the amount of approx. $149 million in respect of royalties for prior periods). These are the steps taken by the government to increase the State take from ICL from now until the end of the ICL franchise in 2030:

• Amending the Law for the Encouragement of Capita Investment: in 2011, the State excluded the mining and quarrying operations from the scope of the capital investment encouragement law, thus increasing tax revenues collected from ICL. While many companies in Israel which are also active in the periphery and channel most of their product for export continue to pay a reduced tax rate of 9%, the rate imposed on ICL's earnings will amount to as much as 26.5% over the next few years (excluding two ICL subsidiaries that qualify as 'Preferred Enterprises' and will continuing paying the 9% tax rate).
• The 'Salt Harvest' agreement and doubling of royalties: in 2012, as part of the agreement between the State and Dead Sea Works, ICL was forced to finance the lion's share of the project to rescue the hotels on the Dead Sea whose total cost amounts to $1.8 billion until the expiry of its franchise in 2030 (see elaboration in the 'Sustainable Management of Mining Operations in the Dead Sea' section, further in this report).
• Under the same agreement, the royalties on potash mining was doubled from 5% to 10% of the revenues obtained for any quantity of potash that ICL sells every year above 1.5 million tons as of 2012.
• In November 2014, the economic social cabinet adopted the recommendations of Sheshinski Committee II which reviewed the State's take from natural resources. According to these recommendations, the tax mix on natural resources in Israel will consist of three elements: royalties, a tax on natural resources and corporate tax. The committee recommended imposing a progressive tax at a rate to be determined in accordance with the level of the yield on the remaining depreciated cost of the fixed property used in the production and sale of the mineral in that year. The first tax bracket for the natural resource tax will be 25% with respect to a Yield on the Depreciated Cost between 14% and 20%, and the second tax bracket will be 42% with respect to a Yield on the Depreciated Cost over 20%. In addition to this progressive tax, the Committee recommended imposing a uniform royalty of 5% on all natural resources as of 2016 (excluding ICL's subsidiary, Dead Sea Works, for which the uniform royalty will be imposed as of 2017). As a result, ICL is expected to pay another $103 million a year or a total of $1.3 billion until the end of its franchise.

ICL's Impact on the Balance of Payments As one of the three largest exporters in Israel, ICL is responsible for 6% of total exports from Israel (excluding diamonds). The export value of the Company's products was approx. $2.65 billion in 2014, helping Israel's balance of payment and reducing the State's trade deficit. Id's contribution is higher than the total exports of both the agricultural and textile sectors. ICL's Impact on the Public Saving The public is the largest shareholder of ICL. In fact, most Israeli citizens have a direct and indirect share in ICL through their pension and provident fund savings plans as well as other saving and investment channels. As one of the strongest pillars of the Tel Aviv Stock Exchange, ICL shares are an anchor in many stock portfolios and the trading volume of its shares is one of the highest in Israel. Over the past decade, all Israeli citizens have had a share of ICL profits. Over the years, the Israeli public has earned tens of billions of shekels by investing in ICL shares.