Bill Encouraging Foreing Investments in Israel Passes First Reading in Knesset

The bill aimed at encouraging foreign capital investments in Israel passed its first reading today in the Knesset. It provides for the reduction of taxes for foreign investors and permits them to take their profits out of the country as well as capital amortization in the currency they invested. The salient provisions of the bill follow:

1. Businesses which in the view of the government contribute to the development of the productive capacity of the country, the absorption of mass immigration, the increase of exports and decrease of imports, assist in the rational distribution of the population, or the planned exploitation of Israel’s natural and economic resources, are classified as “authorized establishments” and are eligible for the special privileges granted under this bill.

2. On new construction, machinery and industrial equipment for “authorized establishments” an amortization deduction of double the present rate is to be allowed for the first three years; for the next two years, emortization is to be allowed at 150 percent of the present rate.

3. A foreign resident who invests foreign currency in “authorized establishments” can be authorized to transfer abroad profits, capital interest and amortization up to an annual amount of 10 percent of his investment.

4. The Minister of Finance is authorized to exempt from customs duties any equipment installations, machinery, prefabricated industrial structures, rew materials and semi-finished goods which are not manufactured in Israel.

5. For a period of five years, investors in “authorized establishments” will pay an income tax of no more than 25 percent on dividends paid by such establishments.

6. Buildings constructed since the establishment of the state are to be exempt from the Urban or Rural Property Tax for five years.

(The results of a survey made public today by the American section of the Jewish Agency executive in New York show that a total of nearly $25,000,000 of private American capital had been invested in Israel during 1949. The Jewish state has become one of the world’s leading investment centers for American businessmen,” the Agency pointed out, adding that “Israel is currently replacing such former favored investment centers as the United Kingdom, France, Belgium, Italy and Germany.”)

A Netherlands Goverment delegation arrived in Israel today to discuss with this country the extension of the Dutch KIM Airlines here.

Meanwhile, an invitation from the United States to participate in the world exhibition to be hold in Washington next April was officially announced here yesterday. The Government Information Department has already started preparing material for an Israel pavilion.