Nvidia's Israeli Tax Payments to Double to $2.6 Billion
Translated & summarized from Mignews by baba
Nvidia's tax payments in Israel are expected to nearly double to $2.6 billion this fiscal year, up from $1.29 billion last year. Israel is the only country outside the U.S. listed separately in Nvidia's tax report, largely due to its acquisition of Mellanox. The company benefits from significant tax incentives in Israel, reducing its effective rate. However, a new 15% global minimum tax starting in 2026 could increase Nvidia's payments significantly, though some funds may be offset by R&D credits.
The story in 6 lines · by baba
- Nvidia's Israeli tax payments will nearly double to $2.6 billion this fiscal year.
- Israel is the only foreign country listed separately in Nvidia's annual tax report.
- The increase is driven by the Mellanox acquisition and the networking division's performance.
- Nvidia benefits from significant tax incentives in Israel, reducing its tax rate.
- A new 15% global minimum tax from 2026 could raise Nvidia's Israeli tax payments to $5.5-7 billion.
- R&D tax credits may offset some of the increased tax burden from 2027-2028.
Nvidia is projected to pay approximately $2.6 billion in corporate income tax in Israel for the current fiscal year ending in January, a near doubling from the $1.29 billion paid last year. This significant increase is highlighted in Nvidia's annual report, which for the first time broke down tax payments by country, listing Israel separately from all other foreign jurisdictions combined. The substantial tax contributions from Israel are largely attributed to the operations of Mellanox, an Israeli company Nvidia acquired in 2020 for about $6.9 billion. Mellanox retains its status as an Israeli legal entity, making its profits taxable within the country. Nvidia also makes payments for technologies developed in Israel and commercialized globally, under transfer pricing rules.
Nvidia's tax payments in Israel are seven times larger than those of Intel. The company's overall pre-tax profit was around $141 billion last year and is expected to reach $290-300 billion this year. The primary driver of Nvidia's Israeli profits is its networking division, with key developments in Yokneam. This segment's revenue was $31.4 billion last year and $32.3 billion in the first half of the current year. Analysts predict that if current growth rates continue, Nvidia's Israeli tax payments could rise to $3.2 billion.
Despite these large sums, Nvidia benefits from significant tax incentives in Israel, likely holding "special priority technology enterprise" status. This status reduces the tax rate on profits from local intellectual property from 23% to 6%, saving Nvidia an estimated $3.06 billion last year. Adjustments for related Israeli factors further reduced its tax burden by $1.46 billion.
Starting in January 2026, Israel will implement a global minimum tax of 15% for large multinational corporations, as part of an OECD reform. This could increase Nvidia's annual tax payment to between $5.5 and $7 billion, though the budget might not receive these additional funds until 2027 or 2028. Furthermore, Nvidia may reclaim a significant portion through R&D tax credits under a law passed in March 2026.
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