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Tax Alert No. 3
25.12.2008
 - The Economic Enhancement Program – Tax Benefits PackageOn December 15, 2008 the Kenesset Committee of Finance (a committee of the parliament) has authorized the government's Economic Enhancement Program of 2008 (the "Enhancement Program"). The Enhancement Program will become legally effective only after the Israeli Income Tax Ordinance is ammended by the Kenesset. The Enhancement Program includes a tax benefits package, which offers significant tax reduction in relation to repatriation of funds to Israel, as well as additional provisions aimed to encourage foreign residents to invest in the Tel Aviv Stock Exchange ("TASE"). The main tax benefits to be offered by the Enhancement Program are:
In this respect, it should also be noted that the capital gains tax exemption under Section 97(b3) of the ITO, which is currently provided to non-Israeli residents, with respect to certain securities and rights in Israeli resident companies or non-Israeli resident companies which most of their assets are located in Israel , refers only to asset acquired between January 1, 2005 and December 31, 2008. Therefore, this provision does not apply to assets that will be acquired from January 1, 2009 onwards. However, the ITA examines the possibility to extend the purchase period in this provision, since such an extension is in line with the main principles of the Enhancement Program.
בכבוד רב,
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