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(photo credit: Bloomberg)
The Finance Ministry is calling for changes in the country's tax system to boost financial growth and turn Israel into an international financial hub that will be attractive to investors within a decade.
"The tax system in Israel doesn't support the establishment of an advanced capital market enough," Finance Ministry director-general Yarom Ariav said Monday in London at the start of meetings with senior representatives of the financial community. "One of our targets is to examine the changes we need to enact within the tax system and within the regulatory system to transform Israel into a global financial center within a decade."
With the country's capital market already largely liberalized thanks the Bachar reforms, the government has now set its sights on a far more ambitious goal. The idea is to repeat the country's success in establishing an innovative hi-tech sector and establish Israel as an international financial center.
Ariav heads a special committee, the Ariav Committee on Capital Market Reform, which includes members from government, academia and industry. The committee is due to present its policy recommendations in August.
In London, an advisory committee, which was set up to assist the Ariav Committee, met Monday with Ariav. Among the members on the committee are senior representatives from leading investment banks and financial institutions including, Credit Suisse, Merrill Lynch, Lehman Brothers, Morgan Stanley, KPMG, HSBC and representatives from the London Stock Exchange and the London Business School.
During the visit, Ariav together with Israel Tax Authority deputy director-general Gidi Bar-Zakai and Ronny Brison, the Finance Ministry's representative to the European Union, are scheduled to meet with representatives from investment bank JP Morgan and consulting firm Deloitte, who are advising the Ariav Committee. In an attempt to learn from the experience of the establishment of the capital market in Ireland, Ariav and his delegation will also meet with representatives of Ireland's Finance Ministry and its main regulator of the capital market.
In March, Ariav met in New York with senior US financial executives to discuss recommendations on how to turn Israel into an international financial center. They discussed ways to facilitate access by small- and mid-sized businesses to the capital market and reduce the concentration in Israel's capital market.
The executive representatives, mostly from Citigroup and Lehman Brothers, are members of the advisory committee that the Finance Ministry set up to assist the Ariav Committee. The ministry's representative in New York, Zvi Halamish, heads the advisory committee.
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