preface

7.6.10. Capital Intensive Companies
BDO Israel
DOING BUSINESS IN ISRAEL
Under the Law for Encouragement of Capital Investments, Israeli and
foreign entities wholly-owned by foreign investors, whose paid-in
capital exceeds US$ 30 million, of which 75% at least is applied for
"qualifying activities", are entitled to the special status of a “capitalintensive”
company. The Income Tax Commissioner is authorized to
amend the rules for attaining this status. Capital-intensive companies are
entitled to a series of tax benefits over a 30- year period, including:
♦ 25% corporate tax.
♦ 15% withholding tax on dividends.
♦ Corporate tax refunds in the event of distribution of dividends. In this
case, the withholding tax on dividends will be 25 %.
♦ Tax exemption from sale of shares.
Finance Ministry approval is required for this status. An approved
capital-intensive company may also be an Approved Enterprise.
7.7. OVERSEAS MARKETING ENCOURAGEMENT FUND
The Ministry of Industry and Commerce manages a fund for the
encouragement of marketing activities abroad. This fund supports new and
existing small/ medium-sized exporters.
The Ministry participates in risks to which exporters may be exposed with
respect to expenses incurred in promoting their products/services. However, the
fund does not participate in any production, packaging (excluding design), or
other direct expenses.
The amount of support depends, inter alia, on export volumes, marketing
plans, etc.
♦ New exporter - exports up to US$ 2 million per annum, with total annual
turnover not exceeding US$ 4 million. Such an exporter is entitled to a grant
of up to 30% of actual expenses, plus up to 50% of specific marketing
expenses not exceeding US$ 40,000. The volume of the proposed marketing
plan shall not be less than US$ 40,000.
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