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Haaretz
Sun., May 07, 2006 Iyyar 9, 5766 Israel Time: 08:34 (EST+7)
Last update - 08:34 07/05/2006
Ka-ching! On Olmert's 1st day, his first $1b. in tax revenues
By Ora Coren, Haaretz Correspondent
The Finance Ministry has estimated that the tax revenue to be gained from
U.S. tycoon Warren Buffett's purchase of 80 percent of Galilee-based Iscar
Metalworking will be about $1 billion - at NIS 4.6 billion, a figure
amounting to almost 3 percent of the state's estimated tax revenues for
2006.
Talks between Buffett and Iscar founder Stef Wertheimer went on for several
months. About two months ago, treasury officials were let in on the secret
and asked to clarify the tax liabilities involved in the deal, as well as
the Investment Center over at Trade, where they were asked to look into
Iscar's status as an approved enterprise entitled to tax breaks and grants.
Buffett and Wertheimer will establish a joint holding company that will be
80 percent owned by Buffett. Following the clarifications provided recently
by the treasury and Trade and Industry Ministry officials, Buffett decided
to register the holding company in Israel, even after examining several
foreign options including tax-friendly Ireland.
Buffett apparently plans to invest further in the company in production
equipment and facilities. That would make him the first foreign strategic
investor in Israel.
In order to benefit from the tax benefits inherent in the status, he will
have to invest at least $150 million in manufacturing equipment, although
government officials estimated he would invest far more. According to
Investment Promotion Center director Hezi Tzaig, the strategic investor
status will exempt Buffett from any tax on profits and dividends for ten
years.
The investment in equipment will allow Iscar to expand sales and fortify its
status as the leading global maker of metal cutting tools. Eitan Wertheimer
undertook to continue as chair of the company for the next ten years.
After the deal was announced Friday in Omaha, Nebraska, Tzaig said Buffett
and Intel's investments in Israel constitute international recognition of
Israel's economy and faith in its continued growth.
According to Tzaig, these investments far exceed Trade Ministry projections
for increased foreign investment in Israel.
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