ISRAEL INNOVATION BOX

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EXISTING INCENTIVES

Why should you apply for these incentive programs and what do you get within the funding platforms?

1. R&D INCENTIVES

SUPPORTING STRATEGIC COOPERATION BETWEEN ISRAELI COMPANIES AND MULTINATIONAL CORPORATIONS

The Israeli Government provides a variety of practical tools and funding platforms executed through incentive programs aimed at addressing the dynamic and changing needs of the local and international innovation ecosystems. Many of these programs are relevant to a wide range of MNCs activities, for example: incubator incentive programs that are designed for MNCs who invest in new startup companies and offer low risk and high certainty to the MNCs; incentive programs that promote technological innovation of mature and growth companies; incentive programs that focus on collaboration between industry and academia to produce advanced technologies and innovative products; and platforms for cooperation in innovative R&D and attracting strategic foreign stakeholders to Israel.

THE OPPORTUNITIES AND BENEFITS FOR MNCS USING THE ISRAEL INNOVATION AUTHORITY’S (IIA) PLATFORMS

DIRECT FUNDING PROGRAMS FOR AN MNC’S LOCAL ENTITY

THROUGH COOPERATION WITH ISRAELI COMPANIES
  • Any IIA funding program
  • Participation in any bilateral or multi-lateral program
    (could also be with the foreign MNC)
  • Scouting, matchmaking and co-funding of individual projects
  • MNC Cooperation Program
  • Technological Innovation Labs
  • Technology Incubators
  • Magnet Consortia
  • R&D/Project Center Incentive Program (in certain fields)

Notes:

* Israeli entities of non-EU MNCs can participate in Horizon 2020
* Israeli entities are subject to Israel's R&D Law

 

WHY SHOULD YOU APPLY FOR THESE INCENTIVE PROGRAMS?

Attractive financing model: Provides financial benefits of significant scale, it participates in the risks involved in the development process of the company. The companies that receive financing undertake to repay the received funding to the Authority via royalty payments from sales, but only if the project succeeds in reaching the commercialization stage ('conditional grant') and only if the program terms require royalty payments.

No equity is taken: Repayments based only on royalties.

Collaboration: Enable MNCs to establish relationships with Israeli start-up and medium- sized companies, and collaborate in their technological activities. Offer significant technological innovation and an opportunity to access new technological fields.

Long-term R&D:The IIA incentive programs enable long-term R&D of large companies, which invest in the development of infrastructural knowledge that can be implemented in a series of products over a long-time frame, as well as for the development of future products and innovative technologies that provide the company with a competitive advantage and the ability to penetrate new markets.

Generic technologies assistance: The incentive programs enable the development of generic technologies in important fields in the global markets, in which Israeli industry has a competitive advantage.

 

WHAT DO YOU GET WITHIN THE FUNDING PLATFORMS?

  • Significant support of 20% to 50% in most programs of the approved R&D expenditures.
  • Companies operating in development zones (periphery areas) are eligible for additional support of 10%.

 

2. PREFERRED CORPORATE TAX RATES

Competitive industrial enterprises that are listed in Israel are entitled to preferred corporate tax rates, as follows:

  • CompanieslocatedinDevelopmentAreaAcouldbeentitledtoa7.5%reducedcorporatetax.
  • Companies located in other areas can enjoy a 16% corporate tax.
  • In both areas, additional dividend tax reductions might also apply.
  • Companies defined as special preferred industrial enterprises are entitled to a further reduction:
    a 5% corporate tax in Development Area A and 8% in the rest of the country. In addition, the dividend withholding tax rate on distribution to a foreign parent company was reduced to 5%.

 

3. ADDITIONAL INCENTIVES

In addition to the tax incentives, Israel offers grants in various areas:

  • Grants of 20% of the approved investment, covering investments in fixed assets (e.g. equipment, buildings, machinery etc.) and up to an additional 10% for enterprises located in southern and northern regions
  • Employment grants – 20%-30% of the salary cost for additional employees
  • Vocational training grants for OJT programs

* In some cases a company may be eligible for more than one grant program

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