Gov't nets NIS 1.9b on Iscar sale to Buffett

The Wertheimer family sold its remaining 20% stake in Iscar for $2.05 billion.

Sources inform ''Globes'' that the government has received a fat check of almost NIS 1.9 billion from the Wertheimer family's sale of its remaining 20% in Iscar Ltd. to Warren Buffett's Berskshire Hathaway Inc. (NYSE: BRK.A) for $2.05 billion.

Official sources confirm that the payment has been made, but they declined to disclose the exact amount. A simple calculation shows that the tax levied on the sale is 25% of the sale price, or $513 million, or NIS 1.89 billion at the prevailing exchange rate.

Some tax experts asserted that the state would not receive even one shekel on the sale, because Iscar is registered in the Netherlands. The consensus held that the state would see NIS 1 billion in taxes, after deducting dividends on which taxes had already been paid. In practice, the final figure is close to the theoretical maximum. Top Tax Authority sources told "Globes" that the sale may save the public some austerity measures.

In the original sale of 80% of Iscar to Berkshire Hathaway in 2006, the state received about $1 billion in taxes, a quarter of the deal.

Another macroeconomic effect of the deal is on the foreign currency market. The conversion of $500 million in one day could cause a sharp appreciation of the shekel. There has been just such an appreciation in the past few days, despite the Bank of Israel's announcement that it is cutting the interest rate for June. Yesterday, the Bank of Israel announced that it will again intervene in the market and buy dollars after the shekel-dollar exchange rate fell to NIS 3.68/$.

Published by Globes [online], Israel business news - - on May 30, 2013

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

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