Israel's Treasury Weighing Capital Gains Tax Cut for Small Investors

Business in Brief | Gov’t panel bars Housing & Construction from Jerusalem Light Rail contracts ■ Vonetize still waiting for first $5 million in deal with Hollywood’s Desilu Studios ■ Banks win a court order delaying Internet Gold share offering

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Israeli shekels. (illustrative)
Israeli shekels. (illustrative)Credit: Reuters

Treasury weighing capital gains tax cut for small investors

Israel’s government is looking at reducing capital gains taxes for small investors to accelerate economic growth, Finance Ministry Director General Shai Babad said on Tuesday. “We are in favor of tax cuts also in the capital market. We will examine a cut in tax on gains in the capital markets for small investors with profits up to 50,000 shekels ($14,000). We’re in favor of any tax reductions that will accelerate growth,” Babad told a business conference. Israel’s capital gains tax stands at 25% to 30%. The Finance Ministry had sought to announce a broad tax-cut plan last month, but a 5.7% year-on-year increase in tax revenue in April was not deemed high enough to justify a reduction yet. Babad said he was still hoping for a tax cut but warned that high spending complicated matters. Babad said the treasury was about to formally announce a revised figure for 2018 economic growth, which he said would be 3.5%. (Reuters and Jasmin Gueta)

Gov’t panel bars Housing & Construction from Jerusalem Light Rail contracts

Housing & Construction Limited shouldn’t be allowed to bid for the contract to build the next phase of Jerusalem’s Light Rail because its controlling shareholder, Shari Arison, is too dominant a figure in the Israeli economy. That is the recommendation of the government’s Committee for Reducing Concentration released on Tuesday that would bar the company from a piece of the 6 billion shekels ($1.7 billion) in contracts. The committee expressed concern that because H&C is such a big player in the infrastructure and transportation sectors “increasing the bargaining power of the group as a result of winning the tender will increase the fear of leveraging it to other activities in the sector.” Arison Investments also controls Bank Hapoalim, Israel’s biggest lender and a major financer of infrastructure projects. H&C said in response that the decision was faulty and based on improper information. The committee also discussed Electra Group’s participation and decided it was not a big enough player in the economy to bar it from bidding. (Avi Waksman)

Vonetize still waiting for first $5 million in deal with Hollywood’s Desilu Studios

Ten weeks ago, it looked like Vonetize was on its way to being acquired by Desilu, the Hollywood studio whose credits include  “I Love Lucy” and “Star Trek.” But Vonetize is still waiting for the $5 million Desilu agreed to pay for a 10% stake from Vonetize’s controlling shareholders as the first stage in a full-fledged takeover. On Tuesday, Vonetize explained to investors that checks for $5 million were delivered by the mid-April deadline, but the bank clearance to cash them never arrived. Desilu ascribed the delay to “technical reasons” and said they remained “fully committed to completing the deal” and that it was working to ensure the funds within 14 days. It turned out Desilu meant 14 business days. When that deadline passed on Monday it said it needed “an additional brief period” to complete the deal.  Shares of Vonetize, a maker of live channel streaming and on-demand services, ended up 9.9% at 1.19 shekels (33 cents). (Guy Erez)  

Banks win a court order delaying Internet Gold share offering

Citing legal problems, Internet Gold’s bank shareholders won a court order on Tuesday delaying a planned offering of shares and warrants by the company. The offering, which threatens to dilute the bank’s 55% stake to 35%, was due to take place on Tuesday, but Tel Aviv District Court Judge Eitan Orenstein ordered it delayed indefinitely. The three banks – Hapoalim, Israel Discount and First International – said they intended to buy into the offering to ensure their stakes aren’t diluted, but said Internet Gold was under no pressure to conduct the offering quickly and that the law requires a general shareholders meeting to approve the measure first. However, behind the banks’ move is an emerging deal that would enable Keidan Dahari and Yaron Adiv, partners in the real estate company Tnuport, to buy into the offering as a first step to gaining control of Internet Gold and, through it, Bezeq. Internet Gold shares ended down 1.7% at 9.37 shekels ($2.62). (Michael Rochvarger)

Tech takes Tel Aviv higher on back of Wall Street gains

Tech shares led the Tel Aviv Stock Exchange higher for a second day on Tuesday as Facebook, Amazon, Apple, Netflix and Alphabet rose sharply on Wall Street. The TA-35 and TA-125 indices both closed about 0.6% higher to 1,531.35 and 1,385.68 points, respectively, on thin turnover of just over 1 billion shekels ($300 million).  The TA Tech Elite index scored a 1.6% advance to 420.96, led by a 5.9% increase for LivePerson to a close of 77.04 shekels. Other tech gainers included Nova rose 3.1% to 111.90 and Formula Systems 2.9% to 136.10. Elbit Systems, which led the most actives for a second day in a row and rose 1.7% to 444.50, and Nice added 1.9% to 389.90. Bezeq group shares, however, were lower: Bezeq itself shed 2.7% to 4.28 and Internet Gold lost 1.7% to 9.37. Mobile operators Cellcom Israel and Partners Communications ended down, respectively, by 1.25% to 24.46 and 3.1% to 13.68. (Michael Rochvarger)