Wellington, Aug 12 NZPA - Takeover target NZ Farming Systems Uruguay (NZFSU) says it has been granted tax benefits currently worth $US20 million ($NZ29m) to $US25m under Uruguayan tax law.

The benefits would be available to offset the company's tax liability once it becomes profitable, anticipated to be in the 2011-12 financial year.

Company chairman John Parker said approval of the income tax concessions recognised its investment in developing dairy farms, including investment in milking sheds, roading, electricity, irrigation and other infrastructure.

"We are delighted that the government of Uruguay has recognised the beneficial impact of our operations in keeping with its established policy to promote investment," Mr Parker said.

"Our operations have already created about 400 new jobs in rural communities in Uruguay, with 31 milking sheds now in operation, plus dry stock land, quite apart from the substantial temporary impact of employment created while farms are being established."

The NZFSU board has advised shareholders that for now they not accept a 55c per share takeover offer from Singapore-based Olam International. A target company statement due to be published on August 23 will include a recommendation from the NZFSU board.

Olam previously had a stake of 18.45 percent in NZFSU, and has a commitment from PGG Wrightson that it will accept the offer for its entire 11.52 percent shareholding.

NZFSU shares were unchanged at the offer price on the New Zealand stock exchange today.