Israel Pushes Through New Securities Tax Bill
An Israeli parliamentary committee has debated a bill to lower capital gains tax
on foreign securities in a bid to eliminate the tax distinction between foreign
and domestically-traded secuities.
The bill, discussed by the Knesset Finance Committee on Monday, will seek to
implement new rules equalizing capital gains and interest tax two years earlier
than planned. Lawmakers are hopeful that its second and third readings will
be concluded in time for the measure to go into effect on January 1,
2005. As a result of the new legislation, real capital gains and interest tax will
be reduced from 35% to 15%, while dividends and profits tax on foreign funds
will fall from 35% to 25%. However, investors will be unable to offset future gains against losses accrued
in 2003 and 2004, a move likely to disappoint the banking sector, as representatives
had requested the inclusion of the measure. In order to speed the new bill through, the finance committee has proposed
the splitting off of the legislation from a larger income tax authority bill. This is due to be discussed during the committee’s next session on Monday.
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