Finance Minister Yuval Steinitz
Finance Minister Yuval Steinitz. Photo by Yossi Zamir
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Debate continues over whether multinational companies should be given tax breaks on profits they earned in Israel, but proposed legislation on the subject will not be presented at Sunday's cabinet meeting as Finance Minister Yuval Steinitz had initially intended.

It is estimated that the so-called "trapped profits" - on earnings that multinationals would normally pay tax on if they transferred the money out of the country as dividends - collectively amounts to NIS 120 billion. These profits have been earned by firms that received government incentives to invest here.

Steinitz decided at the last minute to defer cabinet consideration of his proposal for tax breaks on trapped profits, in part due to opposition from members of his ministry's professional staff.

Earlier this month, Steinitz had pushed for tax concessions of 40% to 70% on multinationals' profits. Proposed legislation would give companies a tax break if the taxes on the profits would be paid by 2013 and left in Israel, generating a large short-term jump in tax payments at a time when tax revenues have been declining.

The Knesset will be adjourning for its summer recess on Wednesday, which will require Steinitz to seek a special parliamentary session if action is to be taken on a proposed bill on the subject.

The Finance Ministry said the legislation is complex and not ready to be presented yet.

Meretz party leader Zahava Gal-On, who had threatened to go to the High Court of Justice over the legislation, said the proposal would not stand up to the court's scrutiny and defeating it would ultimately mean billions more in state revenues.