Driving High-Tech Growth Through Tax Certainty and Regulatory Efficiency

The Ministry of Finance, the Tax Authority and the Israel Innovation Authority announced a comprehensive reform in high-tech taxation designed to enhance tax certainty, remove investment barriers, encourage rapid return of Israeli high-tech professionals from relocation abroad, and streamline bureaucratic procedures. The primary goal of the reform is to increase tax certainty and streamline bureaucratic processes at critical junctures, in order to encourage the continued growth of Israel’s high-tech industry.

 

Corporates

When an Israeli company is acquired by a multinational corporation, a clear tax framework is needed to support growth and certainty. This should include guidelines for valuing intellectual property and determining R&D center pricing methods, along with an advance approval process that provides certainty regarding future tax liabilities.
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New and Returning Israelis

To encourage skilled professionals and new immigrants to move to Israel, a special tax incentive applies to eligible new immigrants and long-term returning residents arriving between November 5, 2025, and December 31, 2026. The benefit includes tax exemptions on qualifying Israeli-earned income, subject to annual ceilings, as well as rules for equity-based compensation, foreign-source income exemptions, foreign tax credits, and more. Eligibility requires Israeli tax residency and at least 75 days of residence in Israel during the relevant years.
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Investors

Israel offers a highly attractive investment environment for high-tech investors through a uniform tax rate and VAT exemption on carried interest for both Israeli and foreign venture capital funds, a simplified VAT model for management fees, and a broad capital gains tax exemption for foreign institutions and corporations investing directly in Israeli high-tech companies, regardless of investment size or local activity. This follows a range of tax relief measures has already been implemented to facilitate mergers and acquisitions of Israeli companies.
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