preface

96
INVESTMENT INCENTIVES AND TRADE ADVANTAGES
♦ Withholding tax on dividends will not exceed 15%.
♦ Full exemption from municipal taxes (including betterment tax) and
any indirect taxes (except for passenger vehicles).
♦ Capital gains on sale of shares are taxable at a rate of up to 15%
unless reinvested within six months - in which case, they are fully
exempt from capital gains tax.
♦ There are no custom duties or import restrictions (except in respect
of health and environmental regulations, etc.)
♦ No foreign currency control will be imposed.
7.9. RESEARCH AND DEVELOPMENT
Numerous research and development programs provide a wide range of
incentives to companies engaged in R&D activities.
7.9.1. Chief Scientist’s Office
The Government of Israel provides cash grants, usually up to 50% of
approved R&D expenses. Approval of R&D programs and actual
expenses are under the responsibility of the Chief Scientist’s Office at
the Ministry of Industry and Commerce.
The research committee is entitled to approve a participation grant of
20, 30, 40, or 50% of total R&D expenses. Start-ups may be eligible for
increased participation grants of up to 66%, or 70%-75% if located in
National Priority Regions.
There are several incentive plans under the sponsorship of the Chief
Scientist’s Office. Among these one may find:
♦ Regular grant programs, offering up to 50% of R&D expenses. The
eligible program should be for know-how, processing and/or
manufacturing procedures, the manufacture of new products or a
significant improvement on an existing process or product.
♦ Magnet - This program, intended for generic R&D technologies,
encourages the formation of a consortia of industry and academic
institutions to develop key technological infrastructures. Magnet also
supports the integration of advanced technologies into industry
through user associations. Grants of 66% of total approved R&D
costs for industrial entities, and up to 80% of approved costs for
academic institutions are available, with no royalty requirements.
BDO Israel