Closure is due to European requirement to pay taxes. Barak appoints his aide Rafi Elul to find a solution.
Polgat's management is liable to close its plant in Kiryat Gat and lay off all 600 employees due to the demand by European countries, including France and Britain, to pay taxes on goods exported to Europe.
Prime Minister Ehud Barak has appointed his aide for social affairs, Rafi Elul to handle the problem. Elul visited the Polgat plant today and met with the company's management, in order to prepare a solution to the problem.
Factory managing director Haggai Leshem explained that Israel does not have tax accumulation agreements with the EU. Elul stated that the excise authorities in Britain, France and other countries demanded that the end-users of goods (European marketing chains) pay taxes on the difference between production costs and the final price. The European customers refused to do so and demanded that Polgat pay, stating they would buy from competing European companies if Polgat refused. The problem intensified in the past year, since Polgat began carrying out over 50% of the work in third countries, such as Morocco, which do not have tax agreements with the EU.
Leshem noted that the date that Polgat will have to pay the taxes and duties to Britain and France will fall in the next few weeks. He said that Polgat is unable to cover the heavy financial burden of these taxes, and if it is forced to pay, it will make exporting its products unprofitable. 95% of Polgat's sales are for export.
Published by Israel's Business Arena on 22 August 2000