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Israeli companies relocate to Cyprus due to tax rates

Official says economy losing hundreds of millions of shekels because high tax rates drive firms out of Israel

Ofer Petersburg
Published: 12.29.06, 11:36

Nearly 300 Israeli have moved their headquarters to Cyprus in 2006, causing the Israeli economy to lose hundreds of millions of shekels in tax revenues, president of the Institute of Certified Public Accountants in Israel (ICPAS), Reuven Schiff, said.


Schiff claimed that due to the high tax rates in Israel, many Israeli firms opt for moving to Cyprus, where the maximum tax rate stands at 11 percent and the dividend for foreign residents is 0 percent.


In comparison, the maximum tax rate in Israel stands at 48 percent.


Schiff noted that a lowering of the tax rates in Israel will decrease tax evasion by an estimated 33 percent and is expected to bring about an economic growth of 1.5 percent.


He added that the current tax rates in Israel deter foreign investors from operating in the country, and cause local investor to channel their investments abroad.