Tivuch Ida

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Gasoline prices to fall sharply at end of month

By Hedy Cohen


Gasoline prices will fall by about NIS 0.55 to NIS 0.60 per liter at the end of December, according to energy-market sources. The fall follows the 40 percent plunge in oil prices on world markets over the past few months.

The price of a liter of 95 -octane gasoline at self-service pumps is currently NIS 6.90, after falling by NIS 0.15 at the beginning of December and by NIS 0.27 at the beginning of November.The pice of a liter of 95-octane gasoline at sef-service pumkps will be about NIS 6.30 from January 1. Fuel prices in Israel are now at their lowest in more than four years.

However, the price of oil on global markets is not responsible for 100% of the price at Israeli pumps. The price of oil on the Lavera international oil market in France, four days before the start of a new month, is responsible for only 35% for the price set on the first of each month. The biggest component in the price is the excise tax imposed by the Finance Ministry, which comprises 41% of the price we pay for gasoline, diesel and other fuels.

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Shekel Jumps versus dollar

By Steven Scheer

The shekel strengthened by 1.2 percent against the dollar on Tuesday in what might be the start of a correction after the greenback failed to break through the NIS 4 level.

The shekel had shed 2.5%in the past week following the collapse of the governing coalition after just 20 months and the setting of a new election in March.

It has lost about 16% of its value versus the dollar since July, depressed by a combination of weakening Israeli growth, interest-rate cuts and general dollar strength.

“The [ exchange rate] has moved a long way in a short period of time,” said a dealer at a large Israeli bank. “Dollar-shekel was overbought, and fundamentals agree it was over bought, so we are having a correction.”

The Bank of Israel fixed the shekel at 3.9440 per dollar – its most robust level since December 1 – from 3.9910 on Monday. After the fixing, it gained to 3.926

Dealers said the dollar, which surged from below NIS 3.4 in July to touch a 27 – month high on Monday, had tried but failed to break above the NIS 4 level.The dollar has not been worth more than NIS 4 since September 2012.

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Very interesting article about taxes on food and homes written on December 1,2014

Netanyahu calls for eliminating duties on food imports, taxing multiple-home owners

PMO: Imported milk 55%more expensive because of tariffs

By Niv Elis

Prime Minister Benjamin Netanyahu on Sunday called on Finance Minister Yair Lapid to reduce or completely do away with import duties on food products, while proposing that owners of three or more homes be taxed to cover resulting budgetary shortfalls.

“This is a step that would immediatly create competition and lower prices,” Netanyahu said during a strategic discussion on the Israeli ceconmy with his office’s National Economic Council.

The Prime Minister’s Office found that duties on some items significantly increased the price to consumers such as the 55 percent tariff on milk and 40% on milk-based drinks, which are being passed on directly to shoppers. Import taxes added 28% to the cost of yogurt; 36% to the price of soft cheeses; 41% to butter; 30% to eggs; 17% to olive oil; and 12.1%-21.7% on frozen chicken, according to the PMO.

Lapid and Economy Minister Naftali Bennett already have reduced import tariffs on certain dairy products and meats, and the government has approved their plan to reduce duties on pasta, cereals, and grain imports, which is set to go into effect in 2015

Food prices have become a persistent political problem for the government over the past few years. In 2011, the high price of cottage cheese paved the way for massive street protests on the cost of living, and more recently, a viral Facebook posting comparing the high price of local pudding snack, Milky, to the price of a similar product in Germany sparked outrage.

Lapid has responded by calling for more products to be placed under price supervision, which would regulate their sale price.

Sunday’s declaration took place during a meeting with PMO Chief Economic Adviser Eugene Kandel on preparing Israel’s labor force for the future and increasing human capital.

“We must put people center with an emphasis an emphasis on imparting fitting skills and redesigning the relationship between labor and the economy based on the north European model,” Kandel said.

Kandel’s reference to north Europe was to a model of investing directly in human capital, as opposed to one that focuses on investing in the work place, which he ascribed to countries such as Portugal, Italy, Greece and Spain.

In a survey of future labor- market expectations, Kandel said manual or repetitive jobs, such as broker, insurance agent and dispatcher, were at  high risk for disappearing.The more promising fields were those that relied on creativity, emotional intelligence and the ability to respond to changing circumstances such as research, caregivers and managers.

The fear is that the narrowing out of mid-level jobs would create greater inequality, leaving an abundance of jobs at the low and high ends of the wage spectrum.

Most of the recommendations focused on education, training and creating tools to help people change and advance their careers.

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Rise in home prices starts to slow down

By Adi Ben-Israel


Home prices are rising at a slower rate, according to data released Sunday by the Government Assessor. Home prices rose just 0.3 percent in the third quarter in comparison with the second quarter.

In six cities there were even falls in prices, including in Tel Aviv, where the price of a four-room apartment fell 2% to NIS 2.7 million. 

The government Assessor’s survey examine prices on four-room apartments only, since these are the properties in highest demand in the Israeli housing market. “In the surveyed period, the trend of moderate price rises that has characterized the past year slowed to the point of halting altogether,” the Government Assessor’s report said. “At the end of March, the government’s decision on measures to bring down housing prices was published, among them the “target price” program and the plan for 0% VAT.

“In the surveyed period, these programs had not yet been implemented. Moreover, Operation Protective Edge took place in this period. These two factors led to a sharp fall in the number of transactions during the summer months, which was partly corrected during September, when there was rise in the number of transactions in comparison with previous months”

In Haifa, the price of four-room apartment fell 1% in the third quarter to NIS 1,277,000. In comparison with the third quarter of 2013, a rise of 3% was recorded. For the Jerusalem, there was a third-quarter rise of 4% to NIS 1,936,000 and a 12- month rise of 10%. In Modi’in, prices remained stable in the third quarter at 1,627,000 up 5% over the third quarter of 2013. In Herzliya, prices fell 2% in the third quarter to NIS 1,990,000 up 3% compared with 2013. In Netanay, prices rose 2% in the third quarter, up 4% compared with 2013.

According to Ministry of Construction and Housing data, the stock of unsold new housing units rose to 26,920 in the third quarter.

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Total value of bank mortgages drops 10.4% in October

By Adi Ben-Israel

Mortgages taken from banks totaled NIS 3.5 billion in October, down 10.4 percent compared with September and 20% compared with October 2013. The figure is the lowest in the past year.
The low volume of mortgages is due to two main factors: the Succot holiday, which took place in October and detracted from activity, and people waiting for the 0% VAT law, which affected total deals in the real-estate market, thereby reducing the volume of mortgages.
The average monthly mortgage volume so far this year is NIS 4.2 b.; the volume of mortgages in October was 16% less than the monthly average this year.

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Raise minimum wage

By Niv Elis

The minimum wage is too low, the Histadrut labor federation told Finance Minster Yair Lapid on Monday.

“Raising the minimum wage is an indispensable step that must be taken in order to reduce social gaps in Israel, ” Histadrut Chairman Avi Nissan koren said in a letter. The fact that working families could remain poor was “unthinkable,” he said.

Economists differ on the effect of minimum wage increases. Some argue that raising the cost of labor will leave businesses with less money, and force them to fire staff. Others argue that the employment effects will not show up beyond a certain level, and that giving workers more money to spend will help the overall economy. More money means more customers, which means greater revenue for the employers who hire workers. Others still argue that when wages are too low, workers may not find it worthwhile to toil all day. According to the Histadrut, the current adult minimum wage of NIS 4,300 a month (NIS 23.12 an hour) is not sufficient to help people escape poverty.

In 2011, the poverty line for a couple was set at NIS 4,001 meaning that one minimum-wage earner would put the coule above the poverty line, according to the Myers JDC Brookdale Institute. For a family with three children and two adults, however, the line was at NIS 7,502 meaning both parents would need to work to be above teh poverty line.

One policy option, which is already in effect in Israel and that the Bank of Israel favors expanding, is the earned income tax credit, or negative income tax. That policy adds to the take-home pay low-wage workers make, costing the employers nothing and giving people a greater incentive to work. The money, of course, comes from taxpayers via the state budget.

Though, the overall level of welfare, employment and child benefits puts a big dent in Israeli poverty, the country’s poverty levels are still among the highest in the Western world.
When it comes to the real minimum wage workers earn, which takes prices into account, Israel is smack in the middle of the OECD, with the average worker earning $5.03 an hour in 2013. On the low end of the spectrum, Mexicans made just $0.80 an hour, while in Luxembourg they earned $10.80 . American minimum wage earners got $7.30 an average that year.

In Israel, the figure has barely budged in more than a decade.

When compared to the median and average wages in the OECD countries, Israel is higher on the list, comping in 6th or 7th place of 24, respectively. that means that the workers right in the middle are making close to the minimum wage.

Minimum 30, an advocacy group for increasing the minimum wage from NIS 23.12 and hour to NIS 30, applauded the Histadrut’s letter, but said that small changes would not be enough.

“We heard about the finance minister’s intention to increase minimum wage by NIS 200 a month. We stress that only a minimum wage of NIS 30 an hour will rescue families from poverty,” the group said.

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Bank of Israel imposes new restrictions on mortgages

Banks to be required to allocate more capital against their housing credit portfolios

by Adi Ben -Israel

The Bank of Israel said it is imposing new restrictions on mortgages amid a continued increase in home prices and the value of mortgages, with Supervisor of Banks David Zaken distributing a draft guideline to the banks calling for a larger capital cushion against the mortgages they grant to homebuyers.

“The draft guideline is being published in light of the continued growth in housing credit and its proportion of the total banking credit portfolio,” the Bank of Israel said Sunday. “
The aim of the guideline is to enlarge the capital cushion that the banking system allocates against its housing-credit portfolio, because of the rise in the risks inherent in this portfolio, and thereby strengthen the banks ability to absorb unexpected losses, and reinforce financial stability in general.”

The guideline states that, beyond the targets set by the Supervisor of Banks for Tier 1 capital for banking corporations (9% by 2015 and 10% by 2017 for the two largest banks), the lenders will have to increase their   capital by an amount representing 1% of their credit for housing. Implementation will be in stages, with the date set for meeting the capital target determined in the guideline being January 1, 2017 

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Own a Hi-Tech company? This info. is for you

Bennett unveils revamped aid program for tech industry

National technology innovation authority to offer loans, investments

By Yuval Azulai & Gali Weinreb

The Ministries of Finance and the Economy last week announced a reform in the Office of the Chief Scientist aimed at facilitating state support for entrepreneurship and innovation that will center around the establishment of a national authority for technological innovation with a wider range of tools for providing aid to companies and entrepreneurs.

“The reform constitutes a revolution that is taking place for the first time after 20 years of the Office of the Chief Scientist”, said Minister of the Economy Naftali Bennet. “It will shorten processes and provide the right toolbox for enhancing Israeli innovation and bolstering economic growth. Together with the Angels Law, the reform will release a huge amount of energy into the Israeli high-tech market” 

Bennett said “the tools now available to the Chief Scientist are like an old-fashioned dial phone in the iPhone 6 era,” adding that as an ex-high tech CEO, he didn’t use the tools then offered by the Chief Scientist because they weren’t suitable for his company. “With the coming reform, the Office of the Chief  Scientist will operate at a sector 20-25 years ahead into the future in Israel through its flexibility and the diverse and up-to-date facilities it offers.”

the authority is slated to begin operating in 2016 as an operational arm of the Office of the Chief Scientist with Chief Scientist Avi Hasson serving as its chairman. The authority also will have a director general, while its board of directors will be composed of representatives of the Ministries of Finance and Economy and 3 representatives from industry.

Hasson, Bennett and Minister of Finance Yair Lapid have been promoting the reform for the past year because they believe the Office of the Chief Scientist’s existing tools no longer are fulfilling the actual needs of companies and entrepreneurs engaged in innovation.

While current assistance is mainly in the form of support through grants, when the new authority begins operating, the state will be able to support innovative ventures, among other things, through equity investment, guarantees, and loans.

If, hypothetically, it is necessary to establish activity in genetic research, after the reform, the state will be able to invest $5 million to accompany a $25 million;n investment by a foreign investor. In the current situation, the government has no tools for supporting such a  venture, because it will take the government 2 years to approve the program. We’ve got to be a lot quicker Bennett told “Globes.”

Hasson said the new authority would be statutory and would be able to take action on industry’s needs “quickly and effectively.””We’ve built a system of balances and brakes to preserve the governments goals with a wise, flexible and innovative policy according to standards adapted to the sophistication and innovativeness of the industry we are serving. The Israeli high-tech industry, with its impressive achievements over the past 20 years that have made Israel one of the world’s leading centers of innovation, is in an alarming slowdown, and significant measures are therefore necessary to restart it.”

The plan will be presented at the socioeconomic cabinet meeting next Sunday, after which it will be brought before the Knesset as part of the Economic Arrangements Bill submitted by the government.

Before the program can be implemented, a change in the current Research and Development Law also is necessary. the budget of the Office of the Chief Scientist currently totals almost NIS  1.5 billion.The authority itself will be budgeted by the state, and future royalties paid by companies that have received aid will go to the state.

At the same time, Bennett told “Globes” he was acting to increase the Chief Scientist’s 2015 budget, adding that , as part of comprehensive staff work he had led with a team on the subject, he consulted leading high-tech figures in an attempt to identify the current gaps.

Several dozen Ministry of the Economy employees slated to work in the framework of the new authority object to the new program, however, as does the Manufacturers Association of Israel, which has  expressed reservations about it on Sunday.

“We welcome any measure that will improve the way the government system works,” said Manufacturers Association CEO Amir Hayek. “In this case, however, the proposal includes an injection of funds designated for industry into venture-capital funds whose goal is to maximize their profits in the short and medium term, and certainly not the development of advanced and sustainable industry in Israel. We’ll get an innovation authority, but there’s a major risk that it will contribute to innovation, but not in Israel.”

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New home sales down 21.7% in first half of 2014

The number of new home sales was down 24% in Jerusalem and 20% in Tel Aviv.

The number of new homes sold in Israel in the first half of 2014 was down 21.7%, the Central Bureau of Statistics reports.

In July the number of new apartments was 2,530 of which 1,450 were sold to the public and 1,080 remained unsold.

52% of new apartments were built on privately-owned land. The number of new apartments built in the first half of 2014 was 20.6% lower than in the corresponding period of 2013.

During that period there were falls in all the country’s regions – about 25% in the central district, 24% in the Jerusalem district, 23% in the southern district, 20% in the Tel Aviv district, 17% in the Haifa district, and 5% in the northern district.

Of the 11,690 homes sold to the public in the first half of 2014, about 9,320 homes were built privately and 2,370 homes by public companies.

Published by Globes [online], Israel business news – www.globes-online.com – on August 28, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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Rents rise 6.6%in a year nationwide

Price of average home increases despite fall in sales

By Ori Chudy and Shlomit Tzur

August is the most active month in the residential rental market, especially with the new academic year approaching. Added to the pressure this year is the expectation that promised government programs will make buying an apartment cheaper, which is encouraging potential buyers to continue renting and to renew leases.

Rents rose 1.1 percent nationally in the second quarter of 2014 compared with the first quarter and 6.6% compared with the corresponding quarter of 2013, according to Central Bureau of Statistics data.

Since 2007 , rents have risen an average of 64.2% nationwide. In Tel Aviv they increased 85% in seven years from NIS 3,067 per month in the second quarter of 2007 to NIS 5,671 in the second quarter of  2014. In 2007, rents for large apartments (4.5 TO 5 Rooms) in Tel Aviv were the highest in the country at  NIS 4,849 per month.Today they are NIS 5,671.

In the Sharon region, average rents have risen 73% since 2007, while rents for large apartments increased 785.

The lowest rents in the second quarter of 2014 were for small apartments (1.5 to 2 rooms) in Haifa and its Bayside suburbs, at NIS 1,654 per month. In 2007 they were also the lowest rents nationwide at NIS 1,250. That is still a  32.3% increase, with a  5.5% annual return on investment for landlords.Renting out an apartment in the North yielded an average return of 5.2%.

Returns on investment for small apartments were 4.5% in Haifa, 4.2% in the central region and 4.75 in the South.

The lowest return for landlords for renting out large apartments in Tel Aviv and in Haifa, at 2.5% in both cities, despite the difference in prices.

The slowdown in the sale of homes continued alongside rising apartment prices in the second quarter of 2014, Government Assessor Tal Alderotti reported Monday. The price of an average 4 room apartment in Israels six largest cities rose 1.6 percent in the second quarter and 6% in the 12 months ending in June.

Average home prices rose most sharply in Ramle (7%) in the second quarter, followed by Eilat (6%), Jerusalem and Modiin (4% each ). Prices rose 1% in Tel Aviv in the second quarter and 9% over the 12 months ending in June..

Prices fell 1% in Holon and 4% in Beersheba in the second quarter. There was no change in prices in Ashkelon, Herzliya, and Kfar Saba in the second quarter.

There was a major slowdown in home sales in the second quarter, mainly of new homes because of the governments plan to charge 0% VAT to new home buyers. However, the low number of deals did not stem rising prices.

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Municipal parking fines worth NIS 400m.

I just read an article how arnona will go up by 2015 and then saw this article. Is there no relief in sight? It just seems the little person who works 2 jobs or long hours to manage financially every month, this system will work against us especially if they will be using a remote control device .

Tel Aviv leads collection, and Jerusalem will boost revenue with automated enforcement.

It isn’t easy to obtain figures for revenue from parking fines in Israel, because they are buried deep in the budget reports of the municipalities and local authorities. But the search is worth it: the figures show that this is a huge industry that generates an aggregate of more than NIS 400 million annually. This money represents a vital part of the municipalities’ income, reaching as much as 5% of their total budgets in some cases.

The record holder is the Tel Aviv municipality, which garnered NIS 142 million just from parking fines last year, several million above the forecast, and close to 3% of its total revenue. For the sake of comparison, in the same year, the Tel Aviv municipality’s revenue from fees for legal parking, in parking lots, via mobile telephone and by other means, was half of this, just NIS 72 million.

The Jerusalem municipality collected only NIS 50 million from parking fines, but small authorities in Gush Dan managed to generate revenue of between NIS 5 million and NIS 17 million each. Even a small town like Hadera collected NIS 8.5 million in parking fines last year.

To produce this revenue, the municipalities employ a small army of inspectors, tow trucks, collection agencies and so on, that carry out their work efficiently and stubbornly, and in some cases have quotas and are compensated according to results.

Unfortunately, the municipalities, backed by the state, are not making do with this. Behind the scenes, a technological revolution is taking place that will turn the parking fines industry into an efficient and unwearying high-tech monster, dramatically upgrading its ability to milk us.

One of the leaders in automation is the Jerusalem municipality, which it seems is jealous of Tel Aviv’s fat revenues from parking fines. Last week saw the conclusion of a tender in which the Jerusalem municipality called for information and preliminary proposals for deploying a parking enforcement system based on video, picture identification, and remote control that will operate in all weather conditions, day and night, seven days a week.

The municipality sets out no fewer than 39 parking offences, with fines ranging from NIS 100 to NIS 500, that it seeks to enforce automatically. Technological enforcement will be much more aggressive than current methods, without the discretion exercised by a human inspector. For example, the system will issue a fine even in the case of a vehicle parked legally, if the parking meter tag is wrongly displayed.

Some among us will say, “What’s the problem? Park legally, or take public transport.” If the solution were so simple, we wouldn’t see the item in municipalities’ budgets “forecast of revenue from parking fines”, which turns out to be highly accurate. There are formulae for calculating the average traffic density in a city and the number of available parking places, and hence the fines that will be collected. Besides which, the municipalities effectively control the number of available parking places, and, on the face of it, the revenue from fines reduces their motivation for investing in their provision.

In short, this is a classic case of the cat guarding the cream. Only in our case the cat is about to become equipped with technologies that produce an inexhaustible cream source.

Published by Globes [online], Israel business news – www.globes-online.com – on June 24, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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Bank of Israel study finds that rental prices influence investors more than interest rate

By NIV ELIS    12/04/2013 18:11


The percentage of households owning more than one home increased nearly 2.5 times from 2003 to 2012, according to a Bank of Israel study released Wednesday, although recent rules have stymied the trend somewhat.

While domestic investors accounted for 3.2 percent of home owners in 2003, that rate rose to 7.9% in 2012, the study found. Yet new rules meant to make investments in second homes less attractive pushed the rate down about 10% in 2011 and 2012 compared with the first eight years in the study.

“The decline of the share of investors in the housing market is still not significant as the state would like, and it will not make a significant contribution to the lowering of housing prices,” said Zvi Livneh, CEO of mortgage advisory group Livneh-Ben Canaan, who cited the historically low interest rates as the main driver.

“Investments in housing have become central for those who want a relatively solid return of 4% to 7%,” he said. “As long as the interest remains low, investors will be an inseparable part of the housing market.”

While rental yields and interest rates are linked, the study found that when it separated the effects of each on investors, the rental yield had a greater influence.

As rent prices go up, more investors flood into the field; each percentage-point increase in rental yield increased the likelihood that an investor would buy a home by 22%. But every percentage-point increase in the interest rate decreased the likelihood of an investment by only 8%.

The greatest investment demand throughout the entire period was in Tel Aviv, which accounted for 29% of the purchases. In general, people buying second apartments to rent out tend to prefer smaller places, which yield higher relative rents, located in Jewish communities within the country’s center. 


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Ministerial C’tee approves 0% VAT on new homes

The bill now moves on to the Knesset Finance Committee.

The changes already made include raising the eligibility threshold for applicants who did not serve in the IDF or National Service from NIS 600,000 to NIS 950,000, and eliminating the eligibility document. The revised bill also sets September 1 for the law to come into effect.

The bill is also opposed by Bank of Israel Governor Dr. Karnit Flug who fears that much of the savings in 0% VAT will not find its way into the buyer’s pockets.

Published by Globes [online], Israel business news – www.globes-online.com – on June 16, 2014

* The big question is, who will it benefit?

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Cabinet unanimously approves zero VAT plan

The goal is for the Knesset to approve the zero VAT bill for first-time homebuyers by September 1.

The cabinet today unanimously approved the zero VAT bill for first-time homebuyers of new apartments. The bill now goes to the Knesset Finance Committee and to the Knesset plenum. The goal is for the Knesset to approve the bill by September 1.

Published by Globes [online], Israel business news – www.globes-online.com – on June 22, 2014

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The plan for 0% VAT on new homes of up to NIS 600,000 for those who don’t perform national service has been slammed.

The maximum price for which a VAT exemption will be granted to those who have not served in the Israel Defense Forces (IDF) or civilian national service, it is believed, will change from NIS 600,000, as the Ministry of Finance announced yesterday, to a larger amount. This follows the stubborn objections of Minister of Construction and Housing Uri Ariel, and comments by the Minister of Justice, and the Attorney General that if there are insufficient new apartments in this price range then the price will change.

It appears that Minister of Justice Tzipi Livni is also demanding explanations about the compromise. Livni instructed Ministry of Justice Land Appraisals Council chairperson Tal Aldrussi to check whether the data presented to the Ministry of Justice in the discussions of the zero-VAT agreement are correct and accurately reflect the reality in the market.

According to Livni, if the data are not in line with reality, “There will be no escaping changing the relevant clause.” She further said that “Encouraging and rewarding young people who bettered their country by serving in the IDF or national civilian service, is a worthy process, and is our duty. If it becomes clear that the figures presented to the Ministry of Justice, based upon which the Attorney General made his recommendation to the government, are inaccurate, and are not in line with reality, there will be no choice but to adjust the amount at which the benefit is given, without harming the benefits given those who served their country.”

Published by Globes [online], Israel business news – www.globes-online.com – on May 12, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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Israel agrees to turn American’s bank accounts over to IRS

Israel agrees to turn American’s bank accounts over to IRS

By Niv Elis

The 2010 Foreign Account Tax Compliance Act requires int’l financial institutions to turn over all information on their US account holders.

The Finance Ministry reached an agreement on Thursday to turn information on US citizens’ bank accounts over to the United States Internal Revenue Service, in compliance with a tough US law designed to counter tax evasion.

The 2010 Foreign Account Tax Compliance Act (FATCA) requires international financial institutions to turn over all the information on their US account holders, or else face tough sanctions from the US: withholding of 30 percent of all US-based transactions.

Though many expatriate Americans don’t know it, they are required to file their income with the IRS each year with a 1040 tax form. Tax agreements signed between the US and Israel mean that Americans in Israel earning less than $97,600 a year generally don’t need to pay any additional taxes, but they are still required to file the form.

If someone doesn’t file the 1040 form, incorrectly answers the section on whether they hold foreign bank accounts with over $10,000, or fails to file the accompanying Foreign Bank Account Report form, the penalties can be monumental. The IRS can fine violators for up to 50% of the account’s maximum balance for each year of each violation.

The agreement means the US will have precise details on which foreign bank-account holders have failed to report their bank accounts and whether it was a purposeful attempt to evade taxes or an accidental oversight.

“The agreements signed with the US Treasury Department will make it easier for the necessary financial institutions to provide the information on American accounts in Israel,” said Frieda Israel, deputy supervisor for state revenue at the Israel Tax Authority, who led the negotiations with the US Treasury Department.

The agreement provided for some exemptions for small financial institutions considered to be low-risk for abetting tax evasion.

For Americans who have not played by the book, there may still be an option for coming clean and avoiding enormous fines through the Overseas Voluntary Disclosure Program; if they come clean about their mistakes and file their old taxes they can pay a lower fee.

The program, however, was designed to get people to disclose their accounts before FATCA went into effect, so it is not clear whether the IRS will continue to offer it once it has people’s account information.

Although FATCA is an American initiative, Wednesday’s agreement opened up the possibility that the US would divulge account information on Israeli citizens living in the United States. That means Israeli entrepreneurs making big bucks in Silicon Valley may yet find the Israel Tax Authority knocking on their doors, asking for a slice.

Israel is not the first country to cooperate, as 28 countries had already signaled their compliance, including Britain, Canada, Denmark, Mexico, Ireland, Norway, Spain, Germany, France, the Netherlands, Japan, Italy and Hungary.

They may have been convinced to participate following a series of high-profile disclosures after notoriously secretive banks in Switzerland, such as UBS and Credit Suisse, agreed to disclose information on their American account holders in 2013, leading to prosecutions.

As The Jerusalem Post reported in August, several Israeli banks may have already begun disclosing account holders’ information even ahead of the FATCA compliance deadline.

In December 2012, Bank Leumi sent letters to its American customers urging them to disclose their accounts. The IRS caught whiff of the warnings, and seven months later said it would no longer accept early amnesty for Leumi account holders who had reported their previous nondisclosure, according to a Forbes report.

With the compliance deadline in sight, Globes reported, US citizens withdrew $4 billion to $5b. from Israeli banks. 


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US real estate co Extell in Tel Aviv bond offering

The New York developer owned by Gary Barnett intends to raise up to NIS 700 million.

US real estate company Extell Development Company, owned by Gary Barnett, has published a draft prospectus for an bond offering of up to NIS 700 million on the Tel Aviv Stock Exchange, via Extell Limited. The bonds are rated A2.

Extell posted a profit of $203 million in 2013, and at the end of that year had shareholders’ equity of $654 million. The Extell group is one of the largest and most active real estate developers in New York. It is the developer of the prestigious One57 project in Manhattan, a tower combining residences and a hotel and the tallest residential tower in the city. It is currently being completed, and is expected to yield revenue of $2.6 billion.

Among other assets, the company owns the 509-room W hotel on Times Square in New York, valued at $505 million.

The Tel Aviv offering will be managed by a consortium headed by Apex Underwriting and Issue Management Ltd. Law firm Shimonov & Co. and accountants Kost Forer Gabbay & Kasierer are acting for Extell.

Extell is making the offering in order to finance real estate investments in the US, chiefly in New York.

The Extell group was founded in 1989. Gary Barnett was named Most Powerful Person by the New York Observer magazine in 2013.

Prices per square foot rose in Manhattan in 2013, with igh demand for luxury apartments, Extell’s specialty. In January 2014, prices were estimated at $1,302 per square foot, 10% more than in January 2013. The average rent in Manhattan in October 2013 was $4.73, compared with $4.61 in October 2012.

Published by Globes [online], Israel business news – www.globes-online.com – on May 11, 2014

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Critera set for 0% VAT on new homes

Finance Minister Yair Lapid and Attorney General Yehuda Weinstein have compromised.

The main factor entitling buyers of new homes to be exempt from VAT will be military or national service, it was agreed today in discussions between Finance Minister Yair Lapid and his top officials and Attorney General Yehuda Weinstein and his officials.

However, following lengthy discussions Weinstein refused to set criteria which did not extend to the entire population while Lapid insisted on preferential treatment for those who undertake military or national service.

Ultimately a compromise was reached. Those undertaking national service will be allowed to buy a 0% VAT apartment for up to NIS 1.6 million including VAT. Other Israelis will be able to buy a 0% VAT apartment up to NIS 600,000 including VAT.

Published by Globes [online], Israel business news – www.globes-online.com – on May 11, 2014