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Coca Cola, Indigo, Tzabar to get tax breaks for new Kiryat Gat plants
_POSTEDON 2002-07-19 16:04:23 by
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Rula _WRITES "Coca Cola, Indigo and Tzabar will probably get special government contribution in excess of $55 million for the establishment of plants in Kiryat Gat, sources connected to the Industry and Trade Ministry's Investment Center told Ha'aretz.
Instructions to approve the allocations came from Industry and Trade Minister Dalia Itzik and Finance Minister Silvan Shalom, despite explicit objections by the staff of both ministries, arguing that there is no valid reason to grant these companies special preference.
The value of the tax breaks that Coca Cola and Tzabar are asking for is around $55 million. The value of those sought by Indigo is still unclear.
Indigo plans to establish a $25 million ink plant in Kiryat Gat that will employ about 70 workers. The staff at both ministries has argued that since this is not a high-tech plant, it does not deserve benefits earmarked for this sector, such as recognizing depreciation. In addition, the number of jobs to be created by the plant does not merit exceptions.
Moreover, the plant in Kiryat Gat is to do the same thing as the existing Indigo facility in Nes Tziona, which makes it an expansion rather than a new plant. Therefore, legally the plant does not deserve the tax breaks given to new plants. Also, the treasury is now checking whether under the trade agreement between Israel and the Netherlands a company operating from Holland, like Hewlett Packard, Indigo's parent company, can pay less taxes on dividend distribution.
Shalom and Itzik, on the other hand, hold that multinational companies should be encouraged to make investments in Israel.
The main benefit sought by Coca Cola is that the tax authorities recognize 50 percent depreciation. Coca Cola has pledged to employ 700 workers in Kiryat Gat, and the Industry and Trade Ministry is pushing for an immediate relocation from Bnei Brak to unemployment-stricken Kiryat Gat.
The depreciation and other benefits that Tzabar has applied for total NIS 10-23 million ($2-$5 million).
The two ministries will soon decide whether to extend the grants as a one-time decision or to change the standards of the Investment Center altogether. The Finance Ministry staff advocates an ad hoc decision, so that in the future the government would not be obligated to provide any other such benefits. The Ministry of Industry and Trade, on the other hand, would like the Investment Center's criteria to be changed.
http://www.haaretzdaily.com/hasen/pages/ShArt.jhtml?itemNo=188446&contrassID=2&subContrassID=2&sbSubContrassID=0&listSrc=Y&itemNo=188446"
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