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Arab localities in the center of the country will be granted the status of a "National Priority Area A" as part of the Capital Investment Law. The cabinet is expected to approve the affirmative action proposal Sunday as part of a discussion on the extension of the law, which is scheduled to expire on July 14.

The new status for the Arab towns will enable them to receive the maximum benefits available for investments, including a grant for up to 24 percent of the investment and a tax exemption for 10 years. Today, the only benefit available to investors in Arab towns in the center is an exemption from corporate tax for two years.

The center of the country is considered only a "C" level National Priority Area. This is the lowest level, and government benefits are mostly granted to only high-tech companies in these regions.

The decision to include Arab municipalities in the center of the country as part of an affirmative action plan was a result of joint meetings between the ministries of industry and trade, justice and finance.

The various ministry representatives who discussed the proposed changes also considered making Haifa a "B" area, up from its present "C" status; but for now they are against changing Haifa's status.

The head of the Government Companies Authority, Hezi Tzaig, confirmed the information.

According to Tzaig, the inclusion of cities such as Tira as a National Priority Area A will likely bring about the consolidation of the industrial areas of Tira and Kfar Sava, so that investors in Kfar Sava will also enjoy the exceptional benefits - something the cabinet certainly had not intended. It seems the various ministries will try to phrase the law in such a way as to prevent such occurences.