'Bezeq couldn't have been sold'
The economic concentration committee wants to block business pyramids from controlling firms by buying only minority stakes.
The economic concentration committee would have blocked the sale of Bezeq and Partner, said senior members on Monday.
The committee wants to block business pyramids from controlling firms by buying only minority stakes. They'd have to buy all a subsidiary's shares, including from the public.
Acquisitions would be two to three times more expensive. For example, if until now a company could take control of a subsidiary by spending NIS 5 billion to buy 51% of the subsidiary's shares, now it would have to buy the full company for NIS 10 billion.
"Anyone who wants to sell off holdings in the future will need to find a foreign buyer, or sell them gradually on the capital market to the public," said a committee member. "There will be fewer large groups with cross-holdings here in the future, and more large companies traded on the stock exchange without a single controlling group," like Teva and Check Point, and most U.S. companies. Thus, the Israeli economy will become less concentrated.
The committee's recommendations would further raise the cost of acquisitions by taxing dividends withdrawn from subsidiaries in order to finance acquisitions by the parent company. From now on, the tax authorities would recognize financing costs minus the dividend, which would mean that in practice, dividends between companies would be taxed.
In the 1930s, the United States began taxing dividends and thus broke up pyramids. But the Israel Tax Authority thought that drastic and difficult to enforce.
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