preface

7. INVESTMENT INCENTIVES AND TRADE ADVANTAGES............................................... 73
7.1 General ..............................................................................................73
7.2 Law For Encouragment Of Capital Investment.................................73
7.3 Depreciation ......................................................................................81
7.4 Encouragement Of Capital Investments In The Tourist Industry......84
7.5 Incentives For Building Rental Housing ...........................................86
7.6 Other Incentive Programs..................................................................88
7.7 Overseas Marketing Encouragement Fund........................................93
7.8 Special Free Zones ............................................................................95
7.9 Research And Development..............................................................96
7.10 International Cooperation................................................................101
8. TAXATION..................................................................................................................105
8.1 General ............................................................................................105
8.2 Income Tax......................................................................................105
8.3 Capital Gains Tax............................................................................120
8.4 The Transfer Pricing Regulations (Determining Market Price) ......126
8.5 Taxation Of Trusts...........................................................................128
8.6 Participation Exemption for Israeli Holding Company ...................129
8.7 Value Added Tax (VAT).................................................................131
8.8 Real Estate Taxes ............................................................................132
8.9 Other Taxes .....................................................................................134
8.10 Tax Treaties.....................................................................................136
9. FOREIGN EXCHANGE CONTROL AND PREVENTION OF MONEY LAUNDERING........ 139
9.1 Foreign Exchange Control...............................................................139
9.2 The Prevention Of Money Laundering............................................140
10. ISRAEL LAND ADMINISTRATION............................................................................... 141
10.1 Responsibilities ...............................................................................141
10.2 Main Activities................................................................................141
10.3 Israeli Land Administration Offices................................................142
11. BDO INTERNATIONAL ............................................................................................... 143
11.1 About BDO .....................................................................................143
11.2 Key Figures For December 31, 2010...............................................144
Appendix 1: Examples of Calculating the Capital Gains Tax................................... 145
Appendix 2: Depreciation Rates ............................................................................... 147
Appendix 3: Useful Addresses in Israel.................................................................... 149
Appendix 4: Useful Addresses Abroad..................................................................... 153
Appendix 5: BDO International ............................................................................... 165