The Investment Center works to implement the Law for the Encouragement of Capital Investments of 1959. The law is the main instrument for stimulating growth and attracting foreign and local investment capital. The objective of the law is to encourage the "establishment and expansion of industrial plants, industrial structures, hotels and tourist projects by granting "approved enterprise" status to applicants seeking investment assistance. This status allows entrepreneurs to receive the benefits available under the law.
The Investment Center's Board of Directors is comprised of representatives from the Ministries of Industry and Trade, Finance, Tourism, Agriculture, the Office of the Prime Minister and a representative of the public. The criteria for granting "approved enterprise" status are: the applicant's competitive capability in international markets and its use of innovative technology, job creation, high added value and ability to answer special needs of the country's economy. The professional administrations and regional development administration within the Ministry remain involved throughout the approval process (see relevant section).
Assistance to Approved Enterprises
The Law for the Encouragement of Capital Investments established several areas of national priority. Assistance varies between these areas. According to the law, an approved enterprise receives benefits for the duration of the period of eligibility.
A. Grant Option
This option involves the disbursement of a grant for the acquisition of fixed capital as specified in the investment plan approved by the Investment Center.
Below are the grant rates for investments under NIS 140 million (until 31.12.99)
Below are the grant rates for:
Investments over NIS 140 million.
Beginning January 1, 2000, investments under NIS 140 million (according to recently proposed legislation for equalizing current grant rates to 1999 rates).
In addition, the company is entitled to a 25% reduction in corporate tax payments
(foreign investors are entitled to further reductions).
B. Other Options
A company may forego these benefits and instead receive a full tax exemption on its undistributed income. The rates of exemption are as follows:
National Area of Priority A - 10 year full tax
National Area of Priority B - 6 year full tax
exemption and 1 additional
year of partial exemption.
Central Region - 2 year full tax exemption and 5
additional years of
partial tax exemption.
Companies in which the foreign investment is greater
than 25% receive
The Investment Center - The Ministry of Industry and
King David St. 30, Jerusalem