preface

84
INVESTMENT INCENTIVES AND TRADE ADVANTAGES
7.4. ENCOURAGEMENT OF CAPITAL INVESTMENTS IN THE
TOURIST INDUSTRY
It should be noted that the previous law benefits (both in the tax benefit track as
well as the grants track) are relevant for hotels, accommodation facilities and
other tourist attractions.
It should be noted that since Amendment 60 to the Law (from 2005), only
accommodation facilities meeting the "foreign residents accommodation"
conditions are eligible for benefits under the Law. As a rule and in order to
comply with the above, at least 25% of overnight stays in an accommodation
facility must be overnight stays by foreign residents. This condition does not
apply to tourist attractions.
According to law, benefits may be claimed on the construction or expansion of
a "tourist facility for overnight stay". The legislator gave a distinction for the
meaning of the term "tourist facility for overnight stay", stipulating that such a
facility must be :
"A structure comprising 11 or more rooms, providing overnight services to
guests passing by and for fixed periods of time, together with accompanying
services including catering, entertainment and leisure services".
From the above, it emerges that a wide range of overnight accommodation
services and other facilities are eligible for the benefits provided under the
Law. Thus, one may easily determine that hotels, motels, guest houses and
even hostels are eligible for such benefits, provided they fulfill the condition of
the number of rooms stipulated by law.
We should also mention that the map for priority regions applicable to tourist
facilities differs from the map for priority regions applicable to the industrial
sector. Thus, and in regard to hotels, it was determined that Development
Region A includes, inter alia, the Western and Upper Galilee, around Lake
Kinnereth, Nazareth, Haifa, along the Carmel Shore, Nethanya, Ramle,
Jerusalem and Jerusalem Corridor, and the Southern Region excluding Eilath
and the Dead Sea.
7.4.1. investment Grants
An entrepreneur wishing to establish an ‘overnight tourist facility’ is
entitled to an investment grant and a capital grant, which vary according
to the facility’s location. Investment grants vary from 10% - 24% of the
entrepreneur’s investment expenses, less land costs.
BDO Israel