JERUSALEM — Canada and Israel are considering a new treaty for the avoidance of double taxation between the two countries, Israel’s Ministry of Finance stated recently.

During their visit to Canada late in 2012, Deputy Minister of Finance Rabbi Yitzhak Cohen and Director of the Israel Tax Authority Doron Arbeli promoted a new treaty.  The two men met with senior staffers at the offices of Finance Canada with the goal of promoting economic relations between the two countries, along with co-operation between Finance Canada and Israel’s Ministry of Finance, Israel’s finance ministry stated in a news release.

The new treaty would set low tax withholding rates and encourage investments in Israel by Canadian residents and investments in Canada by Israeli residents.  In addition, the treaty will solve problems of dual taxation that were not resolved in the existing treaty.

The existing tax treaty between the countries, which was signed in 1976, no longer meets the current needs, in light of economic changes and tax changes that have taken place in the countries over the years, the Israeli finance ministry said.

The deputy minister of finance and the director of the Israel Tax Authority’s visit was preceded by a visit from a delegation headed by Talia Dolan-Gadish, legal adviser to the State Revenues Department, which discussed the clauses of the treaty with a delegation from Finance Canada.

In other bilateral matters, Yuval Steinitz, Israel’s finance minister, suggested the country’s next government, which will be installed following elections later this month, will probably consider Potash Corp. of Saskatchewan Inc.’s proposed acquisition of Israel Chemicals Ltd. (ICL).

Potash Corp., a Canadian company, held talks in October 2012 with the Israeli government about raising its stake in Israel’s second-largest company by market value from the current 14 per cent. The deal “is not yet under serious discussion” as Israel prepares for general elections on Jan. 22, Steinitz said in an interview with Bloomberg News.

“It will take a few months before we can really discuss it,” Steinitz, 54, said in New York. “There are different opinions, but anyhow, I think the next government will have to consider it, if necessary.”

Israel Chemicals employees declared a work dispute last month after Prime Minister Benjamin Netanyahu met in October with Potash CEO Bill Doyle about the proposed deal. The Israeli government can block takeover bids by using its so-called golden share, allowing the state to prevent a takeover to protect natural resources.

“Two things will be taken into account: the needs and interest of the Israeli company, and more particularly, the interests of the Negev, employment and economic development in the Negev,” Steinitz said. The Negev region includes the Dead Sea, from which Israel Chemicals extracts minerals to make fertilizer and potash.

If Potash Corp. successfully acquires Israel Chemicals, it would become the largest producer of potash, a crop nutrient, with control of about 25 per cent of global production capacity.

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In an economic forecast, Steinitz recently updated Israeli growth forecasts for 2013 and 2014, saying the economy is expected to expand by 3.5 per cent in 2013 and 3.9 per cent in 2014.

“Assuming the growth forecast materializes, and that it is a realistic forecast that was prepared by the Economics and State Revenues Department and the management of the Ministry of Finance, over the next two years Israel will continue to be the number 1 growth economy among all the countries of the developed western world. We must do our utmost to preserve a policy that continues to reinforce the economy’s growth engines, to promote investment and to promote the creation of jobs,” Steinitz said.