Israel complies with the WTO agreement on Trade Related Investment Measures (TRIMs).
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.
All benefits available to Israelis are also available to foreign investors. Some of the benefits and requirements are described below. Investment incentives are outlined in the Law for the Encouragement of Capital Investment, and are coordinated by the Israel Investment Center (IIC).
For complete information, potential investors should contact:
Investment Promotion Center
Ministry of Economy
5 Bank of Israel Street,
Israel Investment Center
Ministry of Economy
5 Bank of Israel Street,
Jerusalem 91036 490
The Ministry asks that requests be in writing.
Investment incentives are outlined in the Law for the Encouragement of Capital Investment, and are coordinated by the Israel Investment Center (IIC). http://www.investinisrael.gov.il/NR/exeres/08348DA2-83D3-47B1-B043-ED418D9AA846.htm
To qualify for benefits under the law the company has to be an “industrial company” registered in Israel and has to be “internationally competitive” (i.e. have export capability). However, Biotechnology and Nanotechnology companies do not have to meet the "export" requirement to qualify. An investment in the Priority Area recognized by the law will be termed an Approved Investment and the company will be designated an Approved Enterprise. More information is available at http://www.investinisrael.gov.il
Research and Development
The Office of the Chief Scientist (OCS) of the Ministry of Economy is responsible for implementing the government policy of encouraging and supporting industrial research and development in Israel. The goal of the OCS is to assist in the development of technology in Israel as a means of fostering economic growth, encouraging technological innovation and entrepreneurship, leveraging Israel’s scientific potential, enhancing the knowledge base of industry in Israel, stimulating high value-added R&D and encouraging R&D collaboration both nationally and internationally.
The OCS provides a variety of support programs that operate on a yearly budget of about USD 400 million. This is spent on about 1400 projects undertaken by 830 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 support program for traditional industry was launched in 2005 by the OCS, which offers separate evaluation and discussion for projects from traditional industries. The Office of the Chief Scientist web site (above) also includes information about international support, including bi-national funds, the Global Enterprise R & D Cooperative Framework, Project Centers, and domestic support programs.
Support for R&D Centers of Foreign Companies
There are four programs that enable High-Technology R&D Centers of Foreign Companies to receive government support which can be accessed through the following link. http://www.israelbusiness.org.il/financialassistance/rdincentives.
Financial R&D Centers Support Program
Israel has developed a highly dynamic and vibrant Financial Services IT sector. In order to capitalize on the capabilities of this sector the Ministry of Economy has devised an innovative support program directed at foreign Multi-National financial and banking corporations.
To qualify the following criteria must be met:
The applicant is a foreign company and does not conduct any R&D activities in Israel, operates in the financial sector; and has a turnover in excess of USD 10 billion.
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 in specific centers with high unemployment.
The Standard Program
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 in 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 maximum support per worker will be NIS 135,000 (around USD 34,000) over a period of 30 months or NIS 4,500 (around USD 1,100) per month.
Employment Grant Program for High Salaries (R&D Centers)
The Ministry of Economy has launched an incentive program for supporting industrial companies established in the Negev (south) and Galilee (north) that pay high salaries to their workers. This program is part of a long term plan to promote the establishment of hi-tech companies in outlying areas and to create high-paying employment centers.
The Employment Grant Program for “Anchor” Enterprises
The Ministry of Economy has launched a new incentive program encouraging employment in large enterprises in the Negev (south) and Galilee (north). This new program is part of a long term plan for the Negev and Galilee to increase employment possibilities in northern and southern Israel. To qualify, industrial companies must employ at least 100 workers at their plant.
The program offers the investor employment grants that are calculated as a percentage of the cost to employ each new employee, for a period of up to four years.
Film Law Benefits
The main aim of the law is to encourage the production of foreign films in Israel. To this end, the law offers generous tax benefits that reduce the cost of production by up to 20 percent. The Law for the Encouragement of the Production of Films was approved by the Israeli Knesset on October 28th, 2008. The law recognizes two models: foreign productions and co-productions. In both cases, the benefits by law accrue to an Israeli production company, which is expected to pass on these benefits to the foreign production company.
As repositories of potential ideas, the Israeli technological incubators have helped make Israel’s high-tech entrepreneurship capability world-renowned. The Office of the Chief Scientist (OCS) of the Ministry of Economy has the responsibility of implementing the government policy of encouraging and supporting industrial research and development in Israel at the earliest stages.
Business Grants for Employing New Immigrants
Businesses are eligible to receive grants for employing new immigrants and returning Israelis from The Ministry of Immigrant Absorption's Center for Absorption in Science.
Training Support Program
The Manpower Training Department in the Ministry of Economy actively assists industrial companies to train workers in the different disciplines and professions as required by the company.
The support program is offered via three possible programs:
"Plant Class" whereby the department will support the opening of a class numbering at least 18 to train the workers in the specific skills as required by the company. The main condition being that the company obligates itself to employ at least 50% of the class graduates.
"Training and Placement Class." This program is intended for employers and institutions that wish to train workers in specific disciplines and professions. The company/institution commits itself to employ at least 50% of the class graduates within six months of the completion of the course. The Department will finance the entire cost of running these classes.
"Internal Plant Training. "This program assists employers who wish to have an on-the-job training project in their plant. The Department will assist by paying ILS 1,100 – 1,500 (around USD 250 - 350) per worker in this program.
Invest in Israel website homepage for investment incentives:
There are no universal performance requirements on investments, but performance requirements, including inbound investment “offset” requirements, are often included in sales contracts with the government. In some sectors, there is a requirement that Israelis own a percentage of a company. Israel’s visa and residency requirements are transparent. The Israeli government does not impose preferential policies on exports by foreign investors.
Several major U.S. information technology companies have opened large research and development centers in Israel. Information on Israel's data storage policy for foreign investors can be found at the Ministry of Economy's website. http://economy.gov.il/English/Pages/default.aspx