Since 1989, the high-tech area of Yokneam has been a "National Priority A Area", which entitles approved enterprises to the highest level of tax benefits and investment grants available (currently up to 20% of the investment or a 10 year tax exemption). In addition, companies relocating to the region can apply for concessions in local taxes over a three-year period from the city.

According to Ministry of Economy web site, this status will remain valid at least until Dec. 31, 2017 for both new facilities and expansion of existing ones. For details (in Hebrew) see http://www.moital.gov.il/CmsTamat/Ishuvim .

According to the Investment Center of the Ministry of Economy, if a company with the status of Mifal Meushar (Approved Factory) exports 25% of its sales turnover, it will be entitled to tax benefits of a "Mifal Meudaf Meod" (Priority Factory), which are:

  • Reduced corporate taxes. In 2014 the rate in Yokneam was reduced from 26.5% to 9% (5% for companies with the status of "High Priority Factory".
  • Tax rate for dividends of 20%.
  • Ability to benefit from both investment grants and reduced taxes.

Director General Directive 4.17 provides subsidies for up to 30 months for hiring employees with salaries of up to 15,000 ILS/month in the following special communities:

  • Harredi (Ultra-Orthodox) men - 27.5%
  • Harredi (Ultra-Orthodox) women - 20%
  • Arab, Druze and Circassian men - 20%
  • Arab, Druze and Circassian women - 27.5%
  • Beduin men - 25%
  • Single parents - 20%
  • Handicapped - 20%

Director General Directive 4.18 provides four assistance programs to encourage investment in the economy and the integration of new employees into the workforce, in accordance with Government Resolution No. 1272, of 02.02.2014:

  • High Salary Track
    A track in which the recipients of assistance are companies required to hire the minimum number of employees, as prescribed for this track, within 4 years from the first of the month following the date of receipt of notification of winning this competitive allocation, at the latest, and to employ them for a period of no less than 4 years, at a minimum salary of at least 2.5 times the average national salary (and pro rated if the worker works part-time).
  • Cyber Companies Track
    A track in which the assistance recipients are companies meeting the definition of a "Cyber Company", which will establish and/or relocate and/or expand projects to target towns\cities, in accordance with Resolution 546, and their industrial areas. Such companies are required to hire the minimum number of employees, as prescribed for this track, within 4 years from the first of the month following the date of receipt of notification of winning this competitive allocation, at the latest, and to employ them for a period of no less than 4 years, at a minimum salary at least 2.5 times the average salary (and pro rated if the worker works part-time).
  • Integrated Track
    A secondary within the framework of the Anchor Track, which is designed to integrate workers and/or interns in the employment tracks as defined below.
  • Anchor Track
    A track in which the assistance recipients are companies which are required to hire the minimum number of employees, as prescribed for this track, within 4 years from the first of the month following the date of receiving notification of winning this competitive allocation, at the latest, and to employ them for a period of no less than 4 years, at a minimum salary for a worker, at least 1.5 times the average salary (and pro rated if the worker works part-time).


More Info on National Priority A Area Benefits

  • Oct. 18, 2015: Economy Ministry Allocates NIS 4.5 million for Integrating Students in Industry Located in National Priority Areas or Jerusalem
  • From Selling U.S. Products and Services at www.export.gov under "Selling to the Government":
    Israel is a signatory to the WTO government procurement code. Under the 1993 Public Procurement Law, all Government of Israel (GOI) entities and government-owned companies are required to procure goods or services by issuing a tender. In 1995, the Knesset approved the Preference for Israeli Products regulations and the Mandatory Commercial Cooperation regulations.

    The "Preference for Israeli Products" regulations stipulate that a 15% preference be given to Israeli manufacturers for certain items exempted by the WTO and for products with at least 35% Israeli content and with a value not exceeding US$500,000. Israeli manufacturers in "National Priority Zones" receive an additional 5-15% advantage.  "Mandatory Commercial Cooperation" requirements are an integral part of each international tender document valued at $5,000,000 or more.
  • From the Deloitte Tax Guide under section 1.5 Tax Incentives (Law for the Encouragement of Capital Investment):
    • Companies located in Priority Area A are eligible for a reduced corporate tax rate of 10%
      in 2011-2012 (7% in 2013-2014)
    • Generally speaking, companies qualifying for the reduced rates (i.e. Preferred Enterprises) are eligible for accelerated depreciation on assets used in the production of income. For the first five-year period of operation, the company may depreciate its assets for tax purposes at 200% of the ordinary rate of depreciation for equipment and 400% of the ordinary rate for buildings.
    • Dividends distributed by a qualifying company to Israeli corporate shareholders are exempt from tax if the distribution is made out of qualifying income; dividends distributed to non-Israeli companies are subject to a 15% withholding tax unless the rate is reduced under a tax treaty.
    • In addition to the reduced corporate income tax rate, an industrial enterprise located in development zone A is entitled to a grant if its comprehensive investment plan meets specified criteria. Grants are distributed by the Investment Center at the rate of 20%-24% of the total investment.
    • Under the revised law, tax benefits may be grant to multinational companies, qualified for "Special Preferred Status," whose annual gross receipts exceed NIS 20 billion, invest at least NIS 10 million in a project and hire at least 250 new employees. The tax benefits include a reduced income tax rate of 5% for enterprises located in Priority Area A and an 8% corporate tax rate in all other cases.
    • The Office of the Chief Scientist (OCS) is responsible for promoting industrial R&D that is likely to yield new export products, and R&D benefits may be available. The OCS supports projects from the pre-seed stage to start-up companies to mature industrial R&D enterprises. The support focuses on the development of novel products based on new and innovative technologies of companies in the high-tech and “low-tech” sectors. A qualifying company will be entitled to funding at a rate of 20% to 50% of the program’s approved budget. R&D programs that take place in an area defined as “Development Area A” are eligible for an additional 10% support grant.
  • From Doing business in Israel 2015 section 4.2.3 (Location):
    • The government grants scheme is affected by the location of the company's activities. Several regions in Israel have been declared National Priority Regions (Priority Area A), among them: The Galilee Jordan Valley The Negev Jerusalem (for hi-tech enterprises) Areas which do not include in the Priority Area A are considered under the Law "Other Areas" 1. 4.2.4. The Grant Scheme An industrial enterprise located in "Priority Area A" fulfilling the terms of the Law, may be eligible for grants to be calculated as percentage of the approved investment. The grants may be 20% of the actual investments of the enterprise on the follow assets: Buildings, machinery and other equipments (not including private vehicles) owned by the enterprise and used according to the approved program (by the Incentive Center). Expenses made for land developing. Expenses made for renovation of the building. The grant scheme would only be applicable for enterprises located in Priority Area A. Enterprises from other areas are not qualify for the grant scheme, but can be entitle for tax benefits under the Law. Under the amended law, applies for income accrued starting 2011, enterprises complying with the requirements of the law may benefit simultaneously from both the tax benefits (lower corporate tax rate as described earlier) as well as applicable nonrefundable grants (only relevant for Area A). 1 Before the Amendment No 68 to the Law, the country's regions were divided for 3 zones: Priority Area A, Priority Area B and Other Areas. According to the amendment, Area B was cancelled. However, for the purpose of incentives for Tourism Project (see below) all three areas are relevant.