Innovation Puts Israel In The Spotlight

Author:Mr Gilad Levi
Profession:TMF Group

Israel is a place where ideas are taken seriously and seeds of innovation are given the right conditions to grow.

With more than 1,000 new startups every year, Israel has established itself as a hub for new technologies, research and development. In fact, the Middle Eastern country of eight million people attracts more venture capital per person than any other country in the world, and it's easy to see why.

Israel's economy is robust, maintaining a growth rate higher than most developed economies. The nation's workforce is highly educated (47% have tertiary education compared to the OECD average of 33%).

The country has fostered a pro-business environment, nurtured further by a comprehensive suite of government incentives in three main categories:

investments and manufacturing research and development employment. Incentives include conditional grants, reduced tax rates, tax exemption and other tax-related benefits under the country's Law for Encouragement of Capital Investments and the Law for the Encouragement of Industrial R&D. Companies looking to expand or invest do face some challenges however, and TMF Israel's local experts are helping them with establishment and compliance:

A major retail chain is currently expanding into Israel and we are providing broad assistance, from finding a location, recruitment and banks, audit firms, law firms and establishing local accounting systems. One of our global clients had neglected to consider a local tax requirement and risked penalties and inconvenience. Fortunately this was negated after we urged them to consult their VAT advisor. Another client needed to understand the complexities of Israeli payroll processes. We designed a bespoke, three-day workshop and our payroll team flew to the client's offices to train their internal department. Companies often need assistance with incorporation and registration with Israeli institutions, including the tax authorities. Limited companies and branches are the most common entity types used by foreign investors. Other types include joint ventures and partnerships.

A limited company can be private or public and there are no requirements on the nationality or residence of shareholders. Shareholder liability is limited to their capital contributions,...

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