Despite the Finance Ministry's attempts to give the impression that the arrests of senior Israel Tax Authority officials are not harming Israel's economic activity, a string of large transactions are currently stalled, due to top Income Tax Commission officials' fear of making decisions. TheBpost has learned that among the decisions in limbo at the Income Tax Commission is the huge deal involving the sale of Tnuva, the tax liability of which was supposed to have been determined soon. Similarly, the entire sale of the provident funds and mutual funds from the banking system to the insurance companies and private investment houses has been held up. TheBpost has also learned that prior to the arrest of Tax Authority Director Jacky Matza and Deputy Commissioner for Professional Affairs Gidon Bar-Zakkai, the two held contacts with those buying the provident funds and mutual funds, who demanded that the cost of purchasing the funds be recognized as an expense for them. Due to the fact that the matter involved intellectual property, Matza and Bar-Zakkai refused to approve the entire cost of the acquisition as an expense for income tax purposes. During a series of discussions with the funds' buyers, including entities such as the Markstone and York investment groups and leading insurers such as Harel and Clal, the two officials agreed to recognize about 80 percent of the cost of acquiring the funds as an expense for tax purposes. However, due to their arrest, the approval was not forthcoming, and there is currently no one at the Income Tax Commission there who will sign the final approval. As a result, there is a great deal of uncertainty surrounding the tax liability of the companies that bought the provident funds and mutual funds. Highly placed sources in the tax world told TheBpost that the assessments involved run into the hundreds of millions of shekels, which are being held up at the commission. If the companies that acquired the funds unilaterally book the purchase as a tax expense that will be filed with the income tax authorities for 10 years, in the future they are liable to encounter demands to repay the money to the authorities. However, if the companies do not record the purchase amount as a recognized expense, it could lead to too-high tax payments that would cloud their financial results. The issue that came to rest at Matza and Bar-Zakkai's doorstep was the demand by the fund buyers to recognize the expenses involved in the purchasing of the funds as acquiring goodwill that would be amortized over a 10-year period. Income tax officials argued that the matter involved acquiring an asset not all of which could be amortized, since some of that asset is intellectual property. Thus, for example, the Harel Insurance Company, which bought the Pia Mutual Fund Management Company from Bank Leumi, as well as some of the bank's provident funds, in an overall transaction totaling about NIS 1.1 billion, was supposed to record an annual expense of NIS 110 million, in the wake of the amortization of goodwill of Pia and of Leumi's provident funds. The income tax authorities demanded that Harel book only about NIS 88m., but now, due to the arrests of Matza and Bar-Zakkai, even recognition of that amount has not gotten official consent, and companies like Harel are currently grappling with the question of how to present these amortizations of goodwill in their financial statements.