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Israeli Cabinet Approves Plan for Tax-free Production Zone

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Israel’s Cabinet has approved a controversial plan to establish a tax-free production and export zone, located in either Galilee or the Negev.

All goods produced in the zone will be exported, and all goods arriving in Israel destined for the zone will be shipped there directly from the port of arrival.

Plants operating within the zone will be exempt from taxes for a period of 20 years. Imports will also be tax-exempt, as well as transactions within businesses inside the zone itself.

The 500-acre zone will be fenced off, with customs officials standing on guard to prevent smuggling out of the zone.

The Cabinet’s decision must still be approved by the ministerial legislation committee and the Knesset.

A government statement said the Free Production and Export Zone was designed to create “a comfortable environment for investments and the shortening of bureaucratic procedures.”

A council of representatives of the business sector and the government will be established to determine regulations for the operation of the zone.

Proponents of the project say it will encourage investors to initiate their own projects and take responsibility for all infrastructural expenses, with no costs for the government.

“It will be a free economy,” said Ze’ev Golan, an economist with the Institute for Advanced Strategic and Political Studies who endorses the new project.

“People will come, will apply to invest, will get in one spot the permission to invest and all the different licenses that they need and will immediately begin to build their factory,” he said.

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