WASHINGTON (May. 6)
American investors would be encouraged to make investments in Israel under a new concept which gained impetus today when the U. S. Treasury Department said it would support a Congressional move to provide tax relief for American businessmen specifically to encourage investment in the Middle East and other underdeveloped areas.
The Treasury Department’s position was outlined in a report to the House Ways and Means Committee. The committee originates all tax legislation. The Treasury Department said it would favor use of tax incentives “to promote flow of U.S. capital into the less developed regions of the free world.” The Middle East was specially mentioned and it was clear that the State of Israel was included.
The moves that the Treasury Department would support included deferral of tax on income derived by a business corporation which obtains substantially all of its income from investments in one or more of the less developed areas of the world; ordinary loss treatment for losses incurred by original investors on stock of such corporations: and early implementation of principle of tax sparing in order to make it possible for American firms investing in underdeveloped countries to benefit from tax inducements offered by such a country to attract new capital.
At the same time, the U.S. Export-Import Bank today announced that “no additional applications for loans of Israeli pounds out of the proceeds of the commodity sales agreement of November 6, 1938, ” by the bank under the Agricultural Trade Development and Assistance Act (public law 480) “will be accepted by the bank in Washington or by the United States Embassy in Tel Aviv after May 31, 1959.”
The bank’s announcement said: “Applications now on file for loans in Israeli pounds already exceed the maximum amount of Israeli pounds which the bank expects to have available for lending in its second program for Israel. Credits authorized by the Export-Import Bank in its first Israel program virtually exhausted the Israel pounds then available to the bank.”