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The State of Israel encourages both local and foreign investment by offering a wide range of incentives and benefits to investors in industry, tourism and real estate. Special emphasis is given to hi-tech companies and R&D activities.

Investor, take a look at the benefits, then contact Western Headquarters, Your Business Development Task Force. For more information contact us at Capital@WesternHQ.com or call 1- 778-895-2703

Investment Incentives

Investment incentives are outlined in the Law for the Encouragement of Capital Investment which was recently revised. The new Law differs from the previous one in that it adds a new path for incentives - an automatic one. The incentive programs can be divided into 2 main types:

1) The Grants program - administered by the Israel Investment Center (IIC), a department of the Ministry of Industry, Trade and Labor

2) The Automatic Tax Benefits program administered by the Tax Authorities.

To qualify, investment projects must meet certain criteria including: international competitiveness, minimal designated investment, high added value and registration of the company in Israel.

Once these criteria are met the enterprise gains Approved Enterprise status from the IIC if it chooses the grants program and Beneficiary Enterprise status by the Tax Authority if it chooses one of the tax benefits programs. It is then eligible for incentives, such as grants of up to 24% of tangible fixed assets (grants program only) and/or reduced tax rates, tax exemptions and other tax related benefits.

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Employment Grants

In order to complement the revised Law for the Encouragement of Capital Investments the government has decided to establish an additional program to increase employment in the outlying areas of Israel as well as specific centers with high unemployment.

Support will be granted for the establishment or expansion of industrial plants, telephone call centers, computer service support centers or logistic centers. In order to be eligible for this program these enterprises will have to employ a minimum number of workers at a minimum wage as detailed below.

The initial budget for this program is 450 million NIS (approximately $100 million) to be spread over 3 years -150 million NIS per year. The maximum support per worker will be 120,000 NIS (~ $26,000) or 2,000 NIS (~ $ 440) per month.

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R&D Incentives

The Office of the Chief Scientist (OCS) of the Ministry of Industry, Trade and Labor is responsible for implementing the government's policy of encouraging and supporting industrial research and development in Israel through the Law for the Encouragement of Industrial R&D. The OCS provides a variety of support programs that operate on an annual budget of about US $300 million. This is spent on about 1,000 projects undertaken by 500 companies. These programs have helped make Israel a major center of hi-tech entrepreneurship.

The main OCS' program (the R&D Fund) supports R&D projects of Israeli companies by offering conditional grants of up to 50% of the approved R&D expenditure. If the project is commercially successful, the company shall be under the obligation to repay the grant by royalty payments.

A new support program for traditional industry was launched in 2005 by the OCS, which offers separate evaluation and discussion for projects from traditional industries.

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Start-up Incubators

As massive repositories of potential ideas, the Israeli technological incubators have helped make Israelís hi-tech entrepreneurship world-renowned. The Office of the Chief Scientist (OCS) of the Ministry of Industry and Trade takes great pride in implementing the government policy of encouraging and supporting industrial research and development in Israel at the earliest stages. Today, with both public and private incubators assisting entrepreneurs in turning their ideas into exportable commercial products, Israeli business ventures look forward to a promising future.

 There are 24 incubators scattered throughout Israel, many of which have been recently privatized.

 By the end of June 2004, more than 1000 projects had left the incubators (in addition to the 200 that remained). Of these "graduates," 45% have continued on their own path.

 Most of the ongoing projects have attracted private investments.

 The total private investment obtained thus far is over US $773 million.

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More Info

Israel Government - The Ministry of Industry, Trade and Labor


Source: Invest in Israel
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