New tax benefits, conversion privileges, and other incentives for foreign investors have been introduced by Israel in a bid to accelerate the influx of capital into the rapidly expanding economy of the country, it was announced here today by Meir Sherman, Economic Minister of Israel in the United States. The new incentives became law in the form of an amendment to the Law for the Encouragement of Capital Investments.
“This amendment,” Mr. Sherman said, “expresses the desire of the Israel Government to reduce taxes of new corporate enterprises; to enable foreign investors to convert their earnings into the currency in which the investment was made, without any limitations whenever possible; and to make the privileges stipulated in the investment law available to investors as automatically as possible and with a minimum of administrative procedure.”
The amended law reduces, in effect, income taxes paid by corporations from 50 percent to 25 percent. Profits accruing in foreign currency to investors, from exports, may be converted by them without regard to the original law’s ceiling of 10 percent a year of the foreign capital invested. Enterprises which do not engage in exports may convert their earnings into foreign currency only up to 10 percent of the foreign capital investment.
To enjoy these and other benefits–such as exemptions from property taxes and import duties, deferment of company registration and land transfer fees, and accelerated depreciation for tax purposes–enterprises must be approved by the Investment Center of the Israel Government, as contributing to the healthy growth of the country’s economy.
Loans given for periods of at least 10 years are eligible for consideration as approved investments under the amendment. Also eligible are commercial, industrial and other buildings. “Over 500 approved enterprises, representing some $130,000,000 of foreign and local investment were in production in Israel at the end of last month,” Mr. Sherman said. “In addition, almost 200 approved enterprises, calling for investments of $65,000,000, were under construction or in the planning stage.”
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