Strong Shekel Reduces Israel's Natural Resource Royalty Income

Israel's state revenue from royalties on gas, oil, and mineral extraction fell by 16.5% in 2025, totaling approximately 1.98 billion shekels, compared to the previous year. The primary driver for this decline was the strengthening of the Israeli shekel against the U.S. dollar. Royalties, a 12.5% tax on mineral extraction income, are predominantly collected from natural gas companies whose revenues are closely tied to the dollar's exchange rate.

Revenue from gas and oil royalties specifically amounted to about 1.96 billion shekels in 2025. The "Leviathan" gas field saw the most significant drop, with royalties decreasing by 18.5% from 2024 to 0.83 billion shekels in 2025.

Furthermore, royalty payments from ICL for phosphate extraction experienced a sharper decline, falling by approximately 54% from about 41 million shekels in 2024 to 19 million shekels in 2025. This substantial decrease is attributed mainly to a significant reduction in phosphate extraction volumes from the Oron, Zin, and Rotem fields.

It is important to note that mineral extraction companies also pay corporate income tax and, upon reaching certain profit thresholds, the "Sheshinski tax" on excess profits. This latter tax revenue is directed to the national welfare fund, not the general state treasury.