Hewlett-Packard (HP)-Indigo this week notified the Ministry of Finance of its decision to set up a plant in Kiryat Gat, at a cost of over $25 million. The plant will have 70 employees.
An exclusive “Globes” report early this month stated that Minister of Finance Silvan Shalom has approved an exceptional tax benefit for setting up the plant. The Ministry of Finance approved a 10-12.5% tax rate on the distribution of dividends for the plant, compared with the 15% rate stipulated in the Law for the Encouragement of Capital Investments.
HP-Indigo’s other demands, however, were rejected. Among other things, the company demanded the following: a tax of only 5% on distribution of dividends, a 15-year exemption from company taxes, instead of 10 years, and recognition of the company’s Ness Ziona plant as being in an “A” National Priority region, although Ness Ziona does not have this status.
Following Shalom’s approval, Income Tax Commissioner Tali Yaron-Aldar approved the request.
The question of an HP-Indigo plant in Kiryat Gat arose a short time after former Minister of Industry and Trade Dalia Itzik (Labor) proposed helping 750 laid off textile workers in Kiryat Gat. Itzik contacted a number of large companies with a proposal to move their facilities to Kiryat Gat, or set up new plants in the town, in exchange for state aid.
HP-Indigo has 800 employees in Israel. A year ago, Hewlett-Packard (NYSE: HPQ) acquired Indigo at a company value of $830 million.
Published by Globes [online] - www.globes.co.il - on January 15, 2003