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82 INVESTMENT INCENTIVES AND TRADE ADVANTAGES Moreover regarding equipment, section 2 of the Regulations provides depreciation rates as follows: If the equipment is used in one shift 20% (or - 15%) If the equipment is used in two shifts 30% (or - 18%) If the equipment is used in three shifts 40% (or - 22%) Alternately, a company may choose the devalued balance method, in which the depreciation calculated as part of the devalued balance of the asset as for the beginning of the year: If the equipment is used in one shift 30% for four years and the rest at the fifth year. If the equipment is used in two shifts 40% for three years and the rest at the forth year. If the equipment is used in three shifts 50% for two years and the rest at the third year. A taxpayer electing to use the declining balance method for a specific depreciable asset is bound by the election for the entire period during which the asset is in use. It should be noted that the accelerated depreciation mentioned above depends on classifying the plant as an "Industrial Plant" and the company as an "Industrial Company". 7.3.2. Allowing Investments in R&D Company’s Shares Pursuant to the 2011 and 2012 Economic Arrangements Law, a temporary order has been issued, allowing deduction of investments in a R&D company’s shares vis-a-vis investments made both by individuals as well as corporations. It should be emphasized that in both cases, the allowable amount will be deducted from the original share price. BDO Israel
BDO Israel DOING BUSINESS IN ISRAEL 7.3.2.1. Individuals An amount paid out by an individual or his relative for investing in a “special purpose company”, in consideration of which company shares of up to NIS 5 m. were allotted to him, will be deductible against the individual’s overall income in three equal annual installments, as from the fiscal year in which the capital had been invested. Amongst others, the requirement is that the capital invested ought to have been paid between 1.1.2011 and 31.12.2015, and that most of it is applied by the special purpose company to cover R&D expenses incurred in Israel. The individual is required to hold shares of a special purpose company throughout the reduction period. The Chief Scientists’ approval is required for the scope of R&D expenses. The law stipulates further conditions for allowing the said deduction. 7.3.2.2. Companies A “preferred company” or “beneficiary company” as defined in the Law for the Encouragement of Capital Investments, will be entitled to deduct the cost of shares acquired during the period between 1.1.2011 and 31.12.2015 in an “entitling company” not related to it, to the extent of 20% per annum from the year after such acquisition. It should be noted that the entitling company’s equity capital will be deducted from the acquisition cost. The law specifies a number of conditions for applying the deduction, inter alia that the investment involve the acquisition of at least 80% of the means of control (other than by way of allotment) in the entitling company; that in the year of acquisition and in each of the bonus years, the acquiring company and entitling company be a beneficiary or preferred company; a minimum number of academic employees is required in the field of engineering, computers, natural or exact sciences and a minimum amount of R&D expenses must be incurred during the acquisition year and in each of the acquisition years both by the acquiring as well as the entitling company. For purposes of the deduction, approval must be obtained from the tax authorities that the purpose of the investment is neither the avoidance of tax nor reduction of the tax liability. The law stipulates further conditions for the tax reduction. 83
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PREFACE This publication has been p
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7. INVESTMENT INCENTIVES AND TRADE
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8 THE ISRAELI ECONOMY IN 2010 The I
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1.2.4. Fiscal Developments 10 THE I
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12 THE ISRAELI ECONOMY IN 2010 1.2.
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14 THE ISRAELI ECONOMY IN 2010 Comp
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16 ISRAEL - GENERAL OVERVIEW Israel
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2.4. ISRAEL’S CURRENCY 18 ISRAEL
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Legal holidays in 2010 and 2011 are
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22 OVERVIEW OF ISRAEL’S HIGH-TECH
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OVERVIEW OF ISRAEL’S HIGH-TECH IN
Page 34 and 35: 32 BUSINESS STRUCTURE The Companies
Page 36 and 37: 34 BUSINESS STRUCTURE with respect
Page 38 and 39: 36 BUSINESS STRUCTURE recommendatio
Page 40 and 41: 38 BUSINESS STRUCTURE TASE regulati
Page 42 and 43: 40 BUSINESS STRUCTURE ♦ Non-profi
Page 44 and 45: 4.2.2. Prerequisites 42 BUSINESS ST
Page 46 and 47: 44 BUSINESS STRUCTURE As mentioned
Page 48 and 49: 46 BUSINESS STRUCTURE 4.3. INSURANC
Page 50 and 51: 5.1.2. Distribution of Employees 48
Page 52 and 53: 50 BUSINESS ENVIRONMENT As of Janua
Page 54 and 55: 5.2. ANTITRUST LAW 52 BUSINESS ENVI
Page 56 and 57: 5.3. INTERNATIONAL TRADE 54 BUSINES
Page 58 and 59: 5.4. TRADE AGREEMENTS 56 BUSINESS E
Page 60 and 61: 5.5. PROPRIETARY RIGHTS 58 BUSINESS
Page 62 and 63: 60 ACCOUNTING AND AUDITING PERSPECT
Page 76 and 77: 74 INVESTMENT INCENTIVES AND TRADE
Page 108 and 109: 106 TAXATION Under the recent tax r
Page 110 and 111: 108 TAXATION (d) More than 50% of o
Page 112 and 113: 110 TAXATION 8.2.2.6. Dividends Rec
Page 114 and 115: 112 TAXATION (3) Location of fixed
Page 116 and 117: 114 8.2.3.4. Rental Income from Out
Page 118 and 119: 116 TAXATION "Accommodating Year”
Page 120 and 121: 118 TAXATION "Privileged Securities
Page 122 and 123: 120 TAXATION 8.2.4.3. Tax exemption
Page 124 and 125: 8.3.4. Sale of Stocks 122 TAXATION
Page 126 and 127: 124 TAXATION 8.3.7.3. Setting-off C
Page 128 and 129: 126 TAXATION ♦ According to the r
Page 130 and 131: 8.5. TAXATION OF TRUSTS 128 TAXATIO
Page 132 and 133: 8.6.1. Definitions: 130 ♦ Israeli
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132 5) Certain services rendered to
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8.8.6. Real Estate Companies 134 TA
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8.10. TAX TREATIES 136 TAXATION As
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138 Dividends % Interest % TAXATION
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140 FOREIGN EXCHANGE CONTROL AND PR
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10.3. ISRAEL LAND ADMINISTRATION OF
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11.2. KEY FIGURES FOR DECEMBER 31,
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Example A NIS Example B NIS APPENDI
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APPENDIX 2 Industrial enterprises m
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Ministry of Justice 29 Tsalch Adin
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Israel - US Binational Industrial R
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BRAZIL Embassy of Israel S.E.S Av.
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ECUADOR Embassy of Israel Av. La Co
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IVORY COAST (COTE D’IVOIRE) Embas
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PANAMA Embassy of Israel Edificio P
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THAILAND Embassy of Israel Ocean To
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REPUBLIC OF THE FIJI ISLANDS Embass
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