Jerusalem (Platts)--26Nov2014/914 am EST/1414 GMT

Israels finance ministry has approved a proposed model for gas export tax, Finance Minister Yair Lapid said on Tuesday.

The draft was prepared by a finance ministry team of experts headed by Finance Ministry director general Yael Andorn. Lapid said in a statement that the draft proposal was approved by the ministerial committee on legislation. The proposal will now be presented to the Knesset for final approval in the coming weeks.

The proposal calls for a netback model for determining the transfer price for taxation purposes on exports. The state would determine the expected profit for each export deal and then subtract the accepted return on investment on this kind of transaction. In addition, a mechanism would be established to guarantee that the gas price in export deals is not lower than the average price in the domestic market.

In March 2011, the Knesset passed a new tax law for the oil and gas sector, which was based on the recommendations of a finance ministry appointed committee. The committee, however, left open the issue of taxation on exports.

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