With spending on research and development (R&D) and venture capital investment as a percentage of GDP among
the highest in the world, Israel has entered 2019 as a leading technology country. Israel’s growth in the tech sector has historically been underpinned by its progressive tax framework. Since the 1960s, corporate tax rates for new initiatives have been reduced repeatedly, while in 2003, Israel significantly improved beneficial tax arrangements for employee equity ‘awards’. Israel, in addition, enacted tax perks and full exemptions for domestic and foreign equity investors. The 2017 re-modernisation of Israel’s 1959 ‘encouragement’ legislation (pairing Israel’s tax benefits to the OECD’s instructions on fair tax competition) has further enhanced tax reliefs for income generated in high-tech and innovation industries. In 2019, corporate tax rates on industrial income may range from as low as 6% to 16% depending (but not exclusively) on the volume of activity and geographic location of the taxpayer.