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NEWS
Netanyahu: Interest rate will Fall, Shekel will Weaken
by Yated Ne'eman Staff and M Plaut
According to Finance Minister Netanyahu, with the passage of
the government's economic plan last week the Bank of Israel
sees that there is room to cut interest rates. The lower
rates should cause the shekel to fall against the dollar.
Netanyahu said the rise of the shekel against the dollar was
because the market perceives that the Israeli economy is on
the verge of recovery, but it is bad for exports.
Netanyahu also said that his feeling is that the mood has
changed about Israel. Foreign investors feel that terror is
under control, there is progress on the political front, and
there is still a very strong high tech sector that has a lot
of potential. There is already great interest in investing in
projects, according to the Finance Minister.
Netanyahu has also asked the Knesset Finance Committee to
approve tax exemptions to encourage returning Israelis,
including those who returned in recent years, to bring their
foreign currency assets with them. They will be exempt from
income tax on interest on their deposits in Israeli banks if
the money originates overseas. Netanyahu signed an
administrative order to this effect, and sent it on Friday it
to the Knesset Finance Committee for approval. The committee
will discuss it on Monday and will almost certainly approve
it immediately.
The tax exemption will be retroactive to January 1, 2003 and
will last for ten years from the date the depositor returned
to the country, or five years from the date the order is
approved by the Knesset, whichever comes first.
There are limitations on the tax break. The source of the
deposit may not be the proceeds from the sale of property in
Israel made while the depositor was overseas. The deposits
must be made within 90 days of the depositor returning to
Israel. The depositor must notify the tax inspector of his or
her status as a returning Israeli within 14 days of the date
of the first deposit. The deposit may not be used as a loan,
or as collateral for a bank to loan, to a relative of the
returning Israeli. Current law applies exemptions to Israeli
citizens who resided overseas for at least three years. The
order expands the existing exemption to returning citizens'
income from interest, dividends, royalties, pensions, and
rents, that do not originate from businesses, but from
overseas property.
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