(Reuters) – Israel on Tuesday said it would exempt foreigners from taxes on investments in private equity funds in an effort to make Israel more attractive to foreign investors.
Foreign investment to Israel has dropped due to the global financial crisis.
Foreigners currently pay a tax of 15 percent for individuals and 25 percent for companies on profits made in private equity funds.
The Finance Ministry said it was hoping for a similar response for private equity investments as in venture capital funds.
“The tax exemption on investments for venture capital funds significantly raised foreign investments in Israeli venture capital funds,” the ministry said in a statement.
Unlike VC funds, private equity funds typically invest in larger and more established companies that are then sold at a profit.
There are 10 private equity funds operating in Israel with investments totalling about $2.5 billion combined, the ministry said.
(Reporting by Steven Scheer; Editing by Victoria Main) Keywords: ISRAEL TAX/EXEMPT