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Why Israel?pic
Incentives and Benefitspic
Information for Investorspic
Starting a Business in Israel
Representative Business Costs
Salaries in the High-Tech Sector
Comparative Salaries in the R&D Sector
Employee Social Benefits
Taxation
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Living in Israel
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NEWS
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GLAXOSMITHKLINE AND TECHNION'S BIORAP JOIN HANDS ON IMMUNE-SYSTEM DISEASE TREATMENT

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CHINAS HAIER ESTABLISHES INNOVATION CENTER IN ISRAEL

03/2014
GIVEN IMAGING GETS FDA CLEARANCE FOR COLON CAMERA PILL

03/2014
ISRAELI COMPANIES RECOGNIZED AT MOBILE WORLD CONGRESS IN BARCELONA

03/2014
CONTINUED GROWTH REPORTED IN ISRAEL'S HI-TECH SECTOR IN 2013

03/2014
GOOGLE'S 5TH ISRAEL ACQUISITION: ISRAELI SECURITY START-UP SLICKLOGIN

03/2014
ISRAELS WATER-GEN AMONG FAST COMPANYS 50 MOST INNOVATIVE COMPANIES

03/2014
JAPANESE INTERNET GIANT PURCHASES VIBER FOR $900M

03/2014
YOUNG ISRAELI SCIENTIST WINS TOP AWARD, $100K PRIZE

03/2014
IMPERVA GRABS TWO ISRAELI COMPANIES

03/2014
IBM TO LAUNCH BEERSHEVA CYBER CENTER

03/2014
EVENTS
TAXATION

Taxation

 

The Israeli tax system is based on personal practice.  Israeli residents are required to pay tax on income generated anywhere in the world. Foreign residents are required to pay tax on income generated or derived in Israel, subject to source rules and double taxation treaties.

 

Income Tax

In line with the governments tax reform program income tax for individuals will be reduced as follows (for monthly incomes above $1,650 rate in %)

 

Monthly Income Level ($)

2005

2010

1,650 2,475

32

25

2,475 3,555

37

30

3,555 4,420

37

32

4,420 7,655

39

32

over   7,655

49

44

 

Remark: The rates will be reduced on a gradual basis: 1%-2% per year.

 

Corporate Tax

In the case of companies, the domicile of a corporate entity is determined on the basis of whether it is incorporated in Israel, and whether it is controlled and managed from Israel . The taxable income of Israeli companies is subject to a corporate tax of 26%. According to the government reform program, corporate tax will be reduced next year - 2010, to 25%. The Israeli government also offers many tax benefits as investment incentives via the Law for the Encouragement of Capital Investments.

 

Value Added Tax

Israel also levies a Value Added Tax (VAT), and indirect tax levied on the consumption of goods and services in Israel. VAT is levied at each stage of the sale, including imports, based on the added value at each stage. At each stage, VAT is levied on the buyer and transferred to the Customs and Excise Division of the Ministry of Finance, after deducting the VAT amount paid to suppliers. The current VAT rate in Israel is 16%. However, exported goods and services rendered by a dealer whose principal work is in Israel are not subject to VAT.

 

Social Security

Other taxes include National Insurance (Social Security), paid by both employers and employees. Rates for 2004 were:

 

 

NIS 0-3,482 monthly salary

NIS 3,482-34,820 monthly salary

Employees share

4.5%

10.32%

Employers share

5.93%

5.93%

 

 

Additional Taxes

There is also a Stamp Tax for legal documents at 0.4%-2% of stated value, customs duties of varying rates, purchase tax on certain goods, and municipal tax.

 

Tax Treaties

Israel has entered into tax treaties with many countries around the world, including many EU countries, China, the USA and others. Some of the double tax treaties include tax sparing relief to ensure that Israeli tax benefits derived from encouragement laws are granted to investors by taking into account full Israel tax when computing the foreign taxes, rather than taking into account the actual, reduced taxes.

 


Last modified: 1/24/2010 pic