Israel panel to ease proposed tax hike on mining companies-source

Sun Sep 14, 2014 9:51am EDT
 
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By Steven Scheer

JERUSALEM, Sept 14 (Reuters) - An Israeli government panel studying new taxes on mining companies will soften its recommendations in its final report, a source close to the committee said on Sunday.

"They are going to ease the restrictions a bit," the source said, without elaborating.

The Finance Ministry, which appointed the so-called Sheshinski committee, declined to comment. No date has been given for the release of the panel's final recommendations.

The state currently gets about 23 percent of profits from the natural resources being discussed. Under interim recommendations by the panel issued in May, that would rise to between 46 and 57 percent, bringing an additional 500 million shekels ($138 million) a year into state coffers.

Potash and speciality chemicals maker Israel Chemicals (ICL) , which mines minerals from the Dead Sea, would be hardest hit by the recommendations.

In response to the interim recommendations, ICL froze more than $1 billion of investments in Israel and cancelled two more projects that would have cost $750 million. ICL chief Stefan Borgas told Reuters tax increases in the mining sector would deter investments and damage the economy.

The company also stepped up pressure on the government to reconsider the plan by formulating an efficiency plan at its bromine compounds unit that would include job cuts and said it would close its Dead Sea magnesium plant in 2017.

ICL - one of the three largest potash suppliers to China, India and Europe and the second-largest Israeli company by stock market value on the Tel Aviv Stock Exchange - is also preparing a legal challenge, on the grounds higher taxes violate a deal it made with the government to harvest salt at the Dead Sea.

ICL, 14 percent owned by Potash Corp of Saskatchewan Inc , on Friday filed with U.S. regulators to list its shares on the New York Stock Exchange.

(1 US dollar = 3.6272 Israeli shekel) (Editing by David Holmes)