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The Law for Encouragement of Capital Investments will be extended for another year past its December 31, 2007 deadline, and not only the six months the Finance Ministry wanted. MK Eli Aflalo (Kadima), the coalition chairman, announced the change yesterday at a session of the Knesset Finance Committee.

Aflalo reached an agreement on extending the law with the treasury, but the amount to be budgeted has yet to be settled. The law provides tax breaks and exemptions, as well as grants to factories and businesses to attract capital investment to Israel.

The committee is requesting NIS 500 million for 2008 to cover the costs of the law, but the treasury is willing to give only NIS 150 million. MKs expect a compromise of around NIS 250 to 300 million.