preface

76
INVESTMENT INCENTIVES AND TRADE ADVANTAGES
Alternatively, an enterprise will be deemed to have fulfilled this
condition if exports amount to 25% at least in case of a new
plant or expansion of an existing one, unlike the previous law,
whereby the minimum requirement for expanding a plant was a
measurement of the increase turnover as compared to the basic
revenue. An enterprise with "indirect exports" may, under
certain conditions, also be deemed to have fulfilled this
condition.
Only income from operations in Israel will be considered as
"preferable" income".
As mentioned earlier, the tax benefit track does not require prior
approval from the authorities. Notwithstanding the aforesaid, in
order to provide greater certainty, an enterprise choosing the tax
benefits program may apply to the tax authority for an advanced
(or pre) ruling whereby the company complies with the terms
stipulated by law, and also for regulating other issues involved
in the application of the law.
Under the new law, a particular tax benefits track exits for
"special industrial enterprises" (applicable to large companies
and/or investments), setting the applicable tax rates at 5% in
Priority Area A and 8% in all other areas, for a period not
exceeding 10 years.
Transitional Orders:
• The previous law is applicable to enterprises whose investments
started before 31/12/2010 and they notified the authorities that the
"election" year for the benefit period would be no later than 2012.
• The previous law will also apply to old programs, based on the
benefits prescribed by law in the “election” year or on the date of
granting approval, as the case may be.
• Notwithstanding the foregoing, enterprises wishing to apply the new
law may do so while at the same time relinquishing the remaining
benefits available under the previous one. Accordingly, a company
eligible for tax breaks under the alternative track offered by the
previous law, may apply the new law by notifying the authorities no
later than the date specified for filing the annual report, and this shall
apply to the fiscal year following the one for which the report had
been filed. From the above, it emerges that an enterprise may pursue
BDO Israel