SELECT ISRAEL

Tax Liability and Governmental Incentives

The Israeli government strongly believes in promoting a favorable business environment for companies and is determined to take the necessary steps to facilitate their process of establishment. As part of its policy, the Israeli government offers supportive conditions for companies seeking to invest in Israel: various grants, reduced tax rates, tax exemptions and other tax-related benefits.

Last year, Israel launched a new intellectual property (IP) tax regime as part of the 2017-2018 state budget. The new regime was tailored to the post-BEPS world, featuring a comprehensive “Innovation box”, encouraging multinationals to consolidate IP ownership and profits in Israel along with existing Israeli research and development (R&D) functions.

 

investments and manufacturing incentives

	Center of Israel	Priority Area
Reduced dividend tax rate (special priority enterprise)	20% (15%)	20% (15%)
Investment grant		Up to 30%
“Innovation box” for IP based companies (consolidated revenues of over NIS 10b)	12% (6%)	7.5% (6%)

*The regular Israeli corporate tax rate is 23%

 

Tax Liability and Governmental Incentives2

When compared to all other countries examined by KPMG, Israel offers the most extensive package of government support, including a wide variety of incentives, grants and tax benefits.

Incentives	Israel	Ireland	United States	United Kingdom	Germany
R&D and IP	v	v	v	v	-
Economic regions	v	-	v	-	-
Capital grants	v	-	-	v	-
Employment grants	v	-	v	-	-
Environmental protection and energy consumption	v	-	-	v	-

"I see innovation coming out of Israel in levels that I don't see in other parts of the worlds."

Don Callahan | Head of Global Operations and Technology, Citi