Israel - General Subsidy Programs

ISRAEL

SUBSIDY PROGRAMS-GENERAL
Last Changes Made December 31, 2001

Effective February 15, 2000, Import Administration began publishing "Decision Memos" to reduce the size of antidumping and countervailing duty Federal Register notices. In cases in which a Memo was published, you will find a link to the memo listed below.

In addition, in the following programs, in instances below in which a proceeding was a Sunset Review, you will see the letters SR after the product name.

COUNTERVAILABLE SUBSIDY PROGRAMS

The subsidy programs listed below have been investigated by the Department and have been found to be "countervailable" in the cases listed and during the periods reviewed based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in those cases.

Bank of Israel Export Loans

Industrial Belts 53 FR 48670 (12/2/88-prelim); 54 FR 15509 (4/18/89-final) not used
Industrial Phosphoric Acid (SR) 64 FR 51954 (9/27/99-prelim); 65 FR 6136 (2/8/00-final)
Industrial Phosphoric Acid (1985/86) 52 FR 3686 (2/5/87-prelim); 52 FR 25447 (7/7/97-final)
Oil Country Tubular Goods (1986/87) 54 FR 25146 (6/13/89-prelim); 55 FR 46703 (11/6/90-final)
Oil Country Tubular Goods (1985) 51 FR 21204 (6/11/86-prelim); 52 FR 1649 (1/15/87-final) not used

(See also Preferential Short-Term Financing Under the Export Credit Funds)
Under this program, special loans to finance penetration of new markets, introduction of new products, special marketing drives, establishment of foreign sales offices, market research, and special foreign marketing expenditures are available to exporters. Since this program is contingent on exportation, we determined it to be countervailable.

Encouragement of Capital Investments Law (ECIL)

The ECIL program was established to attract capital to Israel. In order to be eligible to receive various benefits under the ECIL, the applicant must obtain approved enterprise status. Approved enterprise status is granted by the Investment Center of the Israeli Ministry of Industry and Trade. ECIL programs that have been investigated are:

Accelerated Depreciation Tax Reduction/Exemptions Under Section 42
Dividend and Interest Tax Benefits under Section 46
Drawback Grants Under Section 40E
ECIL Investment Grants
Interest Subsidy Payments
Property Tax Exemptions on Buildings and Equipment (Terminated)
Income Tax Reductions and Exemptions under Section 47
Reduction of Corporate Tax Liability
Section 24 Grants
Section 40B Investment Grants

Encouragement of Capital Investments Law Grants (ECIL)

Under this program of the ECIL, Investment grants are given for the amount representing a percentage of the cost of the approved investment. The amount of the grant benefits received by approved enterprises depends on the geographic location of the eligible enterprises.

Encouragement of Industrial Research and Development Grants ("EIRD")

Under this program, manufacturers, producers and/or exporters may benefit from research and development grants.

Environmental Grant Program

Industrial Phosphoric Acid (SR) 64 FR 51954 (9/27/99-prelim); 65 FR 6136 (2/8/00-final)
Industrial Phosphoric Acid (1999) 66 FR 40987 (8/31/01-prelim); 66 FR 64019 (12/11/01-final) not used
Industrial Phosphoric Acid (1998) 65 FR 53984 (9/6/00-prelim); 66 FR 15839 (3/21/01-final); Final Memo not used
Industrial Phosphoric Acid (1997) 64 FR 24582 (5/7/99-prelim); 64 FR 49460 (9/13/99-final)not used
Industrial Phosphoric Acid (1996) 63 FR 48196 (9/9/98-prelim); 64 FR 2879 (1/19/99-final)

Through the Ministry of the Environment, the Government of Israel administers a program to provide financial assistance for the adaption of existing industrial facilities to new environmental requirements. Companies undertaking programs to reduce air pollution, hazardous wastes and noise levels, and to improve water quality can receive assistance.

Exchange Rate Risk Insurance Scheme

The Exchange Rate Risk Insurance Scheme (EIS) program is operated by the Israel Foreign Trade Risk Insurance Corporation Ltd. (IFTRIC), and was designed to insure exporters against losses which resulted when the rate of inflation exceeded the rate of devaluation and the new Israeli Shekel value of an exporter's foreign currency receivables did not rise enough to cover increases in local costs. The EIS was optional and open to any exporter willing to pay a premium to IFTRIC.

Infrastructure Grant Program

Industrial Phosphoric Acid (SR) 64 FR 51954 (9/27/99-prelim); 65 FR 6136 (2/8/00-final)
Industrial Phosphoric Acid (1999) 66 FR 40987 (8/31/01-prelim); 66 FR 64019 (12/11/01-final)
Industrial Phosphoric Acid (1998) 65 FR 53984 (9/6/00-prelim); 66 FR 15839 (3/21/01-final); Final Memo
Industrial Phosphoric Acid (1997) 64 FR 24582 (5/7/99-prelim); 64 FR 49460 (9/13/99-final)
Industrial Phosphoric Acid (1996) 63 FR 48196 (9/9/98-prelim); 64 FR 2879 (1/19/99-final)
Pure Magnesium (1999) 66 FR 11144 (2/22/01-prelim); 66 FR 49351 (9/27/01-final); Final Memo

Under this program, the Government of Israel establishes new industrial areas by partially reimbursing companies for their costs of developing the infrastructure in certain geographical zones. We determined that this program is countervailable because the grants are specific and are limited to firms located in designated geographic regions.

Insurance from Israel Foreign Trade Risk Insurance Corporation (IFTRIC)

See Exchange Rate Risk Insurance Scheme.

Long-term Industrial Development Loans

This program grants long-term industrial development loans to approved enterprises. These loans are provided to a diverse number of industries, including agricultural, chemical, mining, machine and others. However, the interest rates varied depending on the geographical location of the enterprise.

Preferential Short-Term Financing Under the Export Credit Funds

Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final)
Potassium Chloride (1982/83) 49 FR 26776 (6/29/84-prelim); 49 FR 36122 (9/14/84-final)
Roses (1981/84) 51 FR 37050 (10/17/86-prelim); 51 FR 44498 (12/10/86-final)
Roses (1980/81) 48 FR 50140 (10/31/83-prelim); 49 FR 924 (1/6/84-final)
Roses (1979/80) 48 FR 5985 (2/9/83-prelim); 48 FR 36635 (8/12/83-final)

(See also Bank of Israel Export Loans)
The Bank of Israel provided preferential short-term financing through three export credit funds:

Export Production Fund (EPF)
Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final)
Industrial Phosphoric Acid (1985/86) 52 FR 3684 (2/5/87-prelim); 52 FR 25447 (7/7/97-final)
Oil Country Tubular Goods (1986/87) 54 FR 25146 (6/13/89-prelim); 55 FR 46703 (11/6/90-final)
Oil Country Tubular Goods (1985) 51 FR 21201 (6/11/86-prelim); 52 FR 1649 (1/15/87-final)
Potassium Chloride (1982/83) 49 FR 26776 (6/29/84-prelim); 49 FR 36122 (9/14/84-final)
Roses (1985/86) 54 FR 10395 (3/13/89-prelim); 54 FR 39220 (9/25/89-final) not used
Roses (1981/84) 51 FR 37052 (10/17/86-prelim); 51 FR 44498 (12/10/86-final)
Roses (1980/81) 48 FR 50140 (10/31/83-prelim); 49 FR 924 (1/6/84-final)
Roses (1979/80) 48 FR 5985 (2/9/83-prelim); 48 FR 36635 8/12/83-final)

Under the EPF, the Bank of Israel provides loans to exporters to enable them to finance export production.
Export Shipments Fund (ESF)
Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final)
Industrial Phosphoric Acid (1985/86) 52 FR 3684 (2/5/87-prelim); 52 FR 25447 (7/7/97-final)
Oil Country Tubular Goods (1986/87) 54 FR 25146 (6/13/89-prelim); 55 FR 46703 (11/6/90-final)
Oil Country Tubular Goods (1985) 51 FR 21201 (6/11/86-prelim); 52 FR 1649 (1/15/87-final)
Potassium Chloride (1982/83) 49 FR 26776 (6/29/84-prelim); 49 FR 36122 (9/14/84-final)
Roses (1985/86) 54 FR 10395 (3/13/89-prelim); 54 FR 39220 (9/25/89-final) not used
Roses (1981/84) 51 FR 37052 (10/17/86-prelim); 51 FR 44498 (12/10/86-final)
Roses (1980/81) 48 FR 50140 (10/31/83-prelim); 49 FR 924 (1/6/84-final)
Roses (1979/80) 48 FR 5985 (2/9/83-prelim); 48 FR 36635 (8/12/83-final)

Under the ESF, the Bank of Israel provides loans to exporters to enable them to extend credit in foreign currency to their foreign customers. Financing is granted after shipment of the goods, and for not more than six months. The maximum eligibility rate under this fund is 90 percent.
Imports-for-Exports Fund (IEF)
Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final)
Industrial Phosphoric Acid (1985/86) 52 FR 3684 (2/5/87-prelim); 52 FR 25447 (7/7/97-final)
Oil Country Tubular Goods (1986/87) 54 FR 25146 (6/13/89-prelim); 55 FR 46703 (11/6/90-final)
Oil Country Tubular Goods (1985) 51 FR 21201 (6/11/86-prelim); 52 FR 1649 (1/15/87-final)
Potassium Chloride (1982/83) 49 FR 26776 (6/29/84-prelim); 49 FR 36122 (9/14/84-final)
Roses (1985/86) 54 FR 10395 (3/13/89-prelim); 54 FR 39220 (9/25/89-final) not used
Roses (1981/84) 51 FR 37052 (10/17/86-prelim); 51 FR 44498 (12/10/86-final)
Roses (1980/81) 48 FR 50140 (10/31/83-prelim); 49 FR 924 (1/6/84-final)
Roses (1979/80) 48 FR 5985 (2/9/83-prelim); 48 FR 36635 (8/12/83-final)

Under the IEF, exporters may receive dollar-denominated loans in order to finance importer materials used for export production

Rebate of Wharfage Fees

Carbon Butt-Weld Pipe Fittings (1993) 59 FR 28340 (6/1/94-prelim); 60 FR 10569 (2/27/95-final)

Under this program, exporters are entitled to a partial rebate of wharfage fees paid on imported inputs which are physically incorporated into exported goods.

SUBSIDY PROGRAMS FOUND TO BE NOT COUNTERVAILABLE

The subsidy programs listed below have been investigated by the Department and have been found to be "not countervailable" in the cases listed and during the periods reviewed based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed under the subsidy program title for a full explanation of the Department's analysis in each case where the subsidy program has been examined.

Government of Israel Land Leases

Industrial Phosphoric Acid (1985/86) 52 FR 3685 (2/5/87-prelim); 52 FR 25447 (7/7/97-final)

The Government of Israel appraises land value throughout Israel and neutrally applies terms on its land leases. Land lease rates are determined as a percentage of the appraised value, and lease pay,permits for all lessees in Israel are annually linked to the Israeli consumer price index to account for inflation. We determined that the Israeli government does not provide preferential benefits under this program.

Law for the Encouragement of the Business Sector (Absorption of Workers)

Industrial Phosphoric Acid (1992/93) 61 FR 8258 (3/4/96-prelim); 61 FR 28843 (6/6/96-final)

This program was a temporary program aimed at encouraging employment in order to cope with the problems caused by immigration. This temporary law was instituted in 1991 in an effort to expand employment opportunities in the Israeli economy, following rising levels of unemployment between 1988 and 1991 caused by large Russian immigration. Under the Absorption of Workers program, funded by the Treasury and administered by the National Insurance Institute (NII), any employer in the business sector employing a monthly average of over five employees is eligible to receive a monthly grant from the Treasury for each additional employee hired. During the first year, the grant consisted of one-third of the monthly wages paid to the employee. During the second year, the grant consisted of one-fourth of the monthly wages paid to the employee. We found no evidence that the program is regional, or that approval is contingent upon the export performance of the company, or that the program is limited to a specific enterprise or industry, therefore we found it not to be countervailable.

Preferential Ocean Freight Rates

Potassium Chloride (1982/83) 49 FR 26776 (6/29/84-prelim); 49 FR 36122 (9/14/84-final)

We determined that the shipper Zim Navigation which is 40 percent owned by the Government of Israel structures its ocean freight rates on a purely commercial basis without government intervention.

Preferential Wharfage Charges

Carbon Butt-Weld Pipe Fittings (1993) 59 FR 28340 (6/1/94-prelim); 60 FR 10569 (2/27/95-final)
Potassium Chloride (1982/83) 49 FR 26776 (6/29/84-prelim); 49 FR 36122 (9/14/84-final)

The Israel Ports Authority was established by statute in 1961 as a state corporation to plan, build, develop, manage, maintain and operate the ports of Israel as self-supporting enterprises. Companies must pay IPA an annual rent for using the port territory for terminals as well as general operating charges on a cost plus basis.

Provision of Rail Facilities by the Government of Israel

Industrial Phosphoric Acid (1985/86) 52 FR 3685 (2/5/87-prelim); 52 FR 25447 (7/7/97-final)

The Government of Israel built rail lines after a feasibility study based on cost/profit analysis. The government made a profit on its cargo lines. We determined that the rail rates charged were not preferential, and, therefore, the provision of rail facilities does not confer a subsidy to manufacturers, producers, or exporters in Israel.

Rebate of Export Insurance Premium

Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final) not used
Roses (1985/86) 54 FR 10397 (3/13/89-prelim); 54 FR 39220 (9/25/89-final)
Roses (1979/80) 48 FR 5985 (2/9/83-prelim); 48 FR 36635 (8/12/83-final)

This program which was administered by the IFTRIC, operated to rebate insurance premiums to exporters.

Rebate of the Peace of Galilee Levy

Carbon Butt-Weld Pipe Fittings (1993) 59 FR 28340 (6/1/94-prelim); 60 FR 10569 (2/27/95-final)

Under this program, exporters are entitled to a partial rebate of levies paid under the Peace of Galilee and of wharfage fees paid on imported inputs which are physically incorporated into exported goods.

Rebate of Shlom-Hagalil Special Levy

Oil Country Tubular Goods (1985) 51 FR 21204 (6/11/86-prelim); 52 FR 1649 (1/15/87-final)

Under this program, a duty is paid on all imported raw material and imported goods incorporated into the exported product at a rate of 2 percent. The drawback is at a rate of 1.25 percent of the f.o.b. export value and it is calculated as a percentage of the special levy paid on the imported raw materials included in the exported goods. This program provides a non-excessive rebate of duties paid on imported inputs physically incorporated into the exported product. Therefore, we determined that it was not countervailable.

SUBSIDY PROGRAMS DETERMINED NOT TO EXIST

The following subsidy programs were alleged by the petitioning industries and were investigated by the Department. However, during the investigation we found no evidence that such programs actually existed. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced. It is possible that, while the program named did not exist, a similar program having a different name actually was investigated. If this is the case, you will find that program listed elsewhere in this library.

No programs listed.

SUBSIDY PROGRAMS THAT HAVE BEEN TERMINATED

The subsidy programs listed below have been investigated by the Department and have been found to have been terminated based on the criteria established in the Tariff and Trade Act of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition, you may click on the cases listed below the subsidy program title for a full explanation of the Department's analysis in each of these cases.

Property Tax Exemptions on Buildings and Equipment (ECIL)

This program, part of the ECIL, benefited from tax incentives that allowed eligible enterprises a five-year exemption from payment of two-thirds of property taxes on buildings and a ten-year exemption for payment of one-sixth of property taxes on equipment. Property tax exemptions referred to in Section 53 of the ECIL are taxes on apartment buildings and in residential areas.

Reduction of Corporate Tax Liability under Section 55B of the ECIL

Oil Country Tubular Goods (1985) 51 FR 21204 (6/11/86-prelim); 52 FR 1649 (1/15/87-final) not used
Potassium Chloride (1982/83) 49 FR 26776 (6/29/84-prelim); 49 FR 36122 (9/14/84-final)
Roses (1985/86) 54 FR 10395 (3/13/89-prelim); 54 FR 39220 (9/25/89-final) not used

(Also called Partial Non-Payment of Employer's Tax)
Under Section 55B of the ECIL, employers in approved industrial enterprises located in Development Zone A or B may be exempt from either one half or all of the employer's tax.

SUBSIDY PROGRAMS THAT HAVE NOT BEEN USED

When potential subsidy programs are investigated and found not to be used by the companies being investigated, the Department makes no determination as to their countervailability. If you click on the cases listed under the subsidy program title, you will be linked to each case in which the subsidy program was referenced.

Dividends and Interest Tax Benefits Under Section 46 of the ECIL

Under this program of the ECIL, Dividend and interest tax benefits under section 46 apply to those who invest in the company, if the company was profitable and dividends were distributed to investors. There are no benefits under section 46 that are actually received by the Corporate entity. Section 46 reads:

If an individual (person) received income subject to tax, whose source is an approved investment, such individual will not be subject to income tax of more than 25%, and that dividend will be seen, for tax purposes, as subject to the higher tax of that individual's tax bracket.

Drawback Grants Under Section 40E of the ECIL

Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final)
Industrial Phosphoric Acid (1997) 64 FR 24582 (5/7/99-prelim); 64 FR 49460 (9/13/99-final)
Industrial Phosphoric Acid (1996) 63 FR 48193 (9//98-prelim); 64 FR 2879 (1/19/99-final)
Oil Country Tubular Goods (1986/87) 54 FR 25146 (6/13/89-prelim); 55 FR 46703 (11/6/90-final) not used
Oil Country Tubular Goods (1985) 51 FR 21204 (6/11/86-prelim); 52 FR 1649 (1/15/87-final) not used
Roses (1985/86) 54 FR 10395 (3/13/89-prelim); 54 FR 3929 (9/25/89-final) not used
Roses (1981/84) 51 FR 37050 (10/17/86-prelim); 51 FR 44498 (12/10/86-final)
Roses (1980/81) 48 FR 50140 (10/31/83-prelim); 49 FR 924 (1/6/84-final)
Roses (1979/80) 48 FR 5985 (2/9/83-prelim); 48 FR 36635 (8/12/83-final)

Section 40E of the ECIL provides that the owner of an approved enterprise is entitled to a drawback grant with respect to taxes on investments and investment expenditures. Grants are based on a fixed percentage of the investment.

The Encouragement of Industry (Taxes) Law 5729-1969 (EIL)

Under this law, producers, manufacturers, or exporters in Israel may benefit under the following programs.

Preferential Accelerated Depreciation Under Section 4A of the EIL
Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final) not used
Oil Country Tubular Goods (1985) 51 FR 21204 (6/11/86-prelim); 52 FR 1649 (1/15/87-final) not used

Under section 4A, industrial companies that acquired new business assets subsequent to tax year 1974 are entitled to an annual depreciation allowance equal to fifty percent of the depreciable base of the asset.
Reduction in Income Tax Rates Under Section 19(a) of the EIL
Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final) not used
Oil Country Tubular Goods (1985) 51 FR 21204 (6/11/86-prelim); 52 FR 1649 (1/15/87-final) not used
Pure Magnesium (1999) 66 FR 49351 (9/27/01-final); Final Memo not used

Under section 19(a), industrial companies investing in further development of their production activities are entitled to a reduced tax rate on income chargeable to the investment
Tax Deductible Inventory Adjustment Under Section 5A of the EIL
Fresh Cut Flowers (1985/86) 51 FR 37938 (10/27/86-prelim); 52 FR 3316 (2/3/87-final) not used
Oil Country Tubular Goods (1986/87) 54 FR 25147 (6/13/89-prelim); 55 FR 46703 (11/6/90-final) not used
Oil Country Tubular Goods (1985) 51 FR 21204 (6/11/86-prelim); 52 FR 1649 (1/15/87-final) not used

Under Section 5A of The Encouragement of Industry (Taxes) Law 5729-1969, an industrial company may be entitled to special deductions based on the value of its year-end inventory.

Equity Maintenance Allowance

Oil Country Tubular Goods (1986/87) 54 FR 25147 (6/13/89-prelim); 55 FR 46703 (11/6/90-final) not used

No program description available.

Export Promotion Fund Benefits

Carbon Butt-Weld Pipe Fittings (1993) 59 FR 28340 (6/1/94-prelim); 60 FR 10569 (2/27/95-final) not used
Industrial Phosphoric Acid (1985/86) 52 FR 3686 (2/5/87-prelim); 52 FR 25447 (7/7/97-final) not used

No program description available.

Foreign Investment Company Benefits

Industrial Phosphoric Acid (1985/86) 52 FR 3686 (2/5/87-prelim); 52 FR 25447 (7/7/97-final) not used

No program description available.

Grants Under Section 24 of the ECIL

(Also called Investment Grants Based on the Cost of Property and/or Machinery/Equipment for an Approved Projects)
Through this program of the ECIL, industrial enterprises are entitled to grants equal to 30 percent of the value of approved investments in land, machinery, equipment, buildings and other capital assets.

Interest Subsidy Payments under the ECIL

Under this program of the ECIL, certain investment programs approved after July 1, 1985 were provided with a supplementary temporary capital grant for the rebate of interest on loans provided by commercial banks. The amount of the grant varies according to the development zone in which the enterprise is located.

Investment Grants Under Section 40B of the ECIL

Industrial Phosphoric Acid (1997) 64 FR 24582 (5/7/99-prelim); 64 FR 49460 (9/13/99-final)
Industrial Phosphoric Acid (1996) 63 FR 48193 (9//98-prelim); 64 FR 2879 (1/19/99-final)
Oil Country Tubular Goods (1985) 51 FR 21204 (6/11/86-prelim); 52 FR 1649 (1/15/87-final) not used

Under Section 40B of ECIL, approved entities may receive investment grants for the purpose of purchasing assets on industrial buildings, land development and building repairs. The amount of the grant varies according to the development zone in which the project is located, the type of investment and the corporate structure of the enterprise.

Labor Training Grants

Once a training program is approved by the Ministry of Work and Welfare, this program provides government funding for in-plant training.

Magnesium Research Institute (MRI) and Consortium Research Programs

Pure Magnesium (1999) 66 FR 11144 (2/22/01-prelim); 66 FR 49351 (9/27/01-final); Final Memo not used

No program description available.

Preferential Accelerated Depreciation Under Section 42 of the ECIL

Under this component of the ECIL, approved enterprises may depreciate: (1) machinery and equipment at double normal rate for five years; and (2) buildings at four times the normal rate.

Provision of Funds for Transportation to Eilat Harbor

Carbon Butt-Weld Pipe Fittings (1993) 59 FR 28340 (6/1/94-prelim); 60 FR 10569 (2/27/95-final) not used

No program description available.

Reduced Tax Rates Under Section 47 of the ECIL

This Section 47 ECIL program permits industrial enterprises to take advantage of reduced tax rates on income from investments in development areas and expansion of production activities.

Special Export Financing

Oil Country Tubular Goods (1986/87) 54 FR 25147 (6/13/89-prelim); 55 FR 46703 (11/6/90-final) not used

No program description available.