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Tax Liability and Governmental Incentives

Israel is home to many global companies that enjoy both its thriving, innovative ecosystem, as well as a competitive combination of incentives, grants and tax benefits.

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

A KPMG research examined several incentive packages offered by different countries, such as the U.S., Japan, Ireland, Britain, Germany and others. The study compared government support programs, such as incentives given for R&D centers and IP registration, activities in preferred priority areas and capital expenditures; grants; corporate tax exemptions; employment grants; and envi

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.




United States

United Kingdom


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