preface

7. INVESTMENT INCENTIVES AND
TRADE ADVANTAGES
7.1. GENERAL
The State of Israel encourages investments from both Israeli and foreign
residents, by offering a wide range of incentives and benefits. The principal
goals include: efforts to attract foreign investments to Israel, boost economic
growth, develop human resources, etc.
To attain these goals, Israel offers substantial benefits and concessions through
a number of laws and regulations, as summarized below.
Special emphasis is laid on high-tech companies and R&D activities, as
considerable importance is attached to these fields. Furthermore, numerous
programs have been formed, starting from the seed stage, to support the hightech
industry.
Israeli companies may also be eligible for benefits from international funds
created as a result of cooperation agreements established between the Israeli
and foreign governments, including the United States, Canada, the United
Kingdom, the European Union, etc.
Additionally, to promote weak economic regions within Israel, benefits are
granted in a two differential manner (A and rest of Israel) - being substantially
greater in the priority region (A) than in the rest of the country. As a rule, Zone
A includes the flowing regions: the Galilee, Jordan Valley, the Negev and
Jerusalem for hi tech enterprises. However, enterprises are eligible for benefits
anywhere they are erected, provided they comply with the relevant criteria (see
hereinafter).
7.2. LAW FOR ENCOURAGMENT OF CAPITAL INVESTMENT
7.2.1. Overview
The government's principal tool in this respect is the Law for the
Encouragement of Capital Investment-1959 (hereinafter: "the Law").As
part of the Supplement to Economics Arrangement Law (enacted in
conjunction with the 2011 - 2012 budget) (hereinafter: "the 2011
Amendment") recently ratified, significant changes were introduced in
the application of the Law. The new tax benefits track will apply to
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