Investing in Israel
Table no. 1
Grant path
-
Grants, determined according
to the “National Priority Zone” in which the
enterprise is located.
-
Tax benefits, as specified in
Appendix A. In addition, “Approved Enterprises”
in Priority Zone A enjoy full tax exemption for
the first two years.
-
Accelerated
depreciation - see Appendix 1
| |
Priority Zone A (*) 2001 (**) |
Priority Zone B 2001 |
|
Industrial projects (Up to 140 Million
Shekel) |
24% |
10% |
|
Industrial projects (Above 140 Million
Shekel) |
20% |
10% |
|
Investments in hotels; other
accommodations |
24% |
10% |
|
Other tourist enterprises |
15% |
|
*As of 1997, Industrial
Enterprises on the Grant Path located in Priority Zone "A", are entitled to
tax exemptions for the first two years and reduced tax rates for the
remaining period of benefits (i.e. two years exemption plus five years of
reduced tax rates).
1.The Government recently
decided to increase the benefits for those investing in industry located
along the northern border. An additional 6% can now be received on top of
the standard grant (i.e. a total of 30%).
2. Approved enterprises in
the Negev region may be eligible for an additional 8% grant (i.e. a total of
32%) for investments up to 140 Million Shekel. Investments over 140 Million
Shekel may be eligible for an additional 10% (i.e. a total of 30%), in
accordance with the regulations of the IIC.
3. Investment programs
approved during 2002 and whose applications were submitted after 20th
September 2001, will receive 30% of due payment on investments carried out
in 2002. The balance of the grant will be paid during the fiscal year 2003.
Table No 2
Company Tax Exemption (Alternative Program)
A.
Accelerated depreciation - see Appendix B
B.
A company that waives its project’s right to a grant will receive complete
exemption from company tax on its undistributed income. If dividends are
distributed, the company will pay the tax it would have paid had this
Alternate Program not been chosen. The period of exemption is
determined according to the National Priority Zone in which the approved
project is located.
| Priority Zone A |
Priority Zone B |
Central Israel |
|
10 years of complete
tax exemption |
6 years of complete
tax exemption, and tax benefits: 1 year for local investor ,
4 years for foreign investor |
2 years of complete
tax exemption, and tax benefits: 5 years of for local investor , 8 years
for foreign investor |
C. A company
distributing a dividend will be taxed on the dividend
Tax Benefits for an Approved Enterprise
The tax benefits for an
“Approved Enterprise,” are granted over a period of 7 consecutive years,
starting with the first year that the company earned taxable income,
providing that 14 years have not passed since the approval was granted and
that 12 years have not passed since the enterprise began operating.
If at least 25% of an
enterprise’s owners are foreign investors, the enterprise is eligible for a
10 year period of tax benefits.
Appendix 1 : Tax Rates Table
| |
Company owned by local
investor |
Company owned by
foreign investors, foreign investors´ rate of rights |
Company that is not an approved enterprise |
|
Taxable income |
100% |
100% |
100% |
100% |
100% |
|
Company tax
|
25% |
10% |
15% |
20% |
35% |
|
Company tax
|
25% |
10% |
15% |
20% |
35% |
|
Balance |
75% |
90% |
85% |
80% |
64% |
|
Income tax
|
0% |
0% |
0% |
0% |
0% |
|
Total tax on undistributed income |
25% |
10% |
15% |
20% |
35% |
|
Divided tax: 15% of balance (for “Approved Enterprises”) |
11.25% |
13.5% |
12.75% |
12% |
|
|
Total tax on distributed income |
36.25% |
23.5% |
27.75% |
32% |
52% |
|
(*) in distribution to
an personal or a company abroad; in distribution to an
Israeli company 0% |
|
