IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 05 Nov 2012 | Removal date: open ended
Still in force

FDI: Treatment and operations, nes

On 5 November 2012, the Israeli government adopted the 69th amendment to the 1959 law for encouragement of capital investments. Under certain conditions, the normal tax of 25 percent can be reduced to a minimum of 6 percent. The corporate tax-relief is only available for 'Israeli companies classified as approved industrial enterprises' (Deloitte, International tax, Israel highlights 2012), not for foreign companies.

The main condition is a reinvestment of the firm profits (30- 50% of the earnings) into:
- industrial activities
- research and development
- assets used by the enterprise
- salaries of newly recruited employees.

'The purpose of the provisions was to encourage the Israeli companies to re-invest the profits in its Israeli enterprises and to expand its operations within Israel'. (Ernest & Young, International Tax Alert, 13 November 2012).

Due to the fact that only Israeli firms are entitled to benefit from this tax advantage, the measure discriminates against foreign commerical interests operating in Israel.

AFFECTED COUNTRIES

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