Israel UAE | Business Guide | 2021

30 > High-Tech > Nimrod Yaron & Co. I srael is a world-renowned High- technation. It has thehighest Start- up Exits and patent registrations per capita ratio in the world. Many large international Tech companies identify the potential and choose to invest andbuildR&Dcenters in Israel. Many of the local Tech companies are founded by graduates of Israel's IDF intelligence corps or graduates of one of Israel's top-ranked computer science and engineering schools. Israel is at the forefront of innovation in every kind of technological field - medical, agricultural, IT, cyber, military, Fintech and others Preferred Enterprise (PFE) Regime The "Encouragement of Capital Investments Law, 1959 ” in Israel encourages investments in Israeli industries, especially in the High- tech industry. The incentives include reducing half of the corporate tax rates and other incentives. To qualify for benefits from the PFE, a company has to be an industrial or technological company that meets the relevant criteria. All in all, there are 50 different government grants and tax benefits available. Government grants in Israel There are three main types of government grants offered to foreign entities making direct investments in Israel: 1 . Capital grants - Depending on the geographic location of the enterprise within Israel, industrial companies can receive grants of up to 30 % of approved investments infixedassets. 2 . Employment grants - Employment grants for jobs in priority areas and for the employment ofminorities can reimburse foreign companies up to 40 % of their labor costs. 3 . R&D grants - Multinational companies can receive R&D grants such as: ●● Up to 50% of the R&D budget for collaborating with Israeli start- ups. ●● Up to 66% of the R&D budget in industrial companies. ●● Up to 100% of the R&D budget for research institutions. Israeli Tax Aspects of the Start- upNation - Grants and Benefits Without the law 23 % 23 % 30 % 30 % 0 % 23 % Dividend tax for individual who is not a major shareholder is 25 % Prioritized enterprise 7 . 5 % 16 % 20 % 20 % 0 % 23 % Prioritized enterprise 5 % 8 % 20 % 5 % 0 % 23 % Foreign company - Full ownership - Over 10 B ₪ Prioritized technological 7 . 5 % 12 % 20 % 4 % 0 % 12 % If a foreign entity/individual holds enterprise more than 90 % of the shares - capital tax benefits will be granted under certain conditions Special Prioritized 6 % 6 % 20 % 4 % 0 % 6 % Capital tax benefits are under technological enterprise certain conditions Nimrod Yaron & Co. Nimrod Yaron & Co. is an Israeli boutique tax firm that specializes in Israeli and International taxation. The firm was founded by Nimrod Yaron, CPA, LL. B, a former senior executive in the Israeli Tax Author i t y. The f i rm includes CPAs, Attorneys and Economists, all of whom are experts in taxation. The firm has one of the largest transfer pricing departments in Israel. The firm advises many private and public companies looking to invest in Israel with all tax related issues. Our experts assist our clients in every part of the process andmake sure they receive all the tax and business benefits according to the law. Tax incentives in Israel The following Chart presents the tax incentives enforced by the "Encouragement of Capital Investments Law" Israeli and International Tax Nimrod Yaron & Co. נמרוד ירון ושות‘ Israeli company Tax benefits Corporate income tax rates Dividends tax rate Income tax on IP revenue Notes Development Area A Other areas Individual Foreign company Israel-UAE > Business Guide > 2021