To Encourage Local Tech, Israel to Expand Tax Benefits to Small Companies
Israel’s tax authority has decided to expand the country’s capital investment law, intended to offer large companies tax benefits, to companies employing less than 10 people
For daily updates, subscribe to our newsletter by clicking here.In recent years, the authority rejected a few dozen appeals from small companies looking to receive the benefits given to bigger companies in accordance with the law. Originally written into the books in 1959, the law referred only to manufacturing facilities but has since been revised and updated several times.
Only companies that generate more than 25% of their revenues through exports can benefit from the exemptions. If they meet the threshold requirements, those based in central Israel will be eligible to pay a 16% corporate tax rate, compared a standard corporate tax of 23% paid in Israel, and a dividend tax of 20% compared to 20%-30%. Companies based outside of Israel’s dense urban center are eligible for a corporate tax rate of 7.5%, if meeting all other requirements.
Based on the criteria for the benefits, and taking into account the number of companies that were previously turned down, the update is expected to affect a few dozen of Israel’s thousands-strong startup community.