A Draft Procedure to Enhance Tax Certainty for Multinational Tech Companies Published for Public Comments

Joint Announcement by the Ministry of Finance, the Ministry of Innovation, Science and Technology, the Israel Tax Authority, and the Israel Innovation Authority presents major News for the High-Tech Industry

The Ministry of Finance and the Israel Tax Authority continue to promote the high-tech sector and maintain Israel’s global competitiveness in the field. Today, the Tax Authority published a draft procedure for public comments, aimed at providing tax certainty for multinational technology companies operating in Israel. Stakeholders are invited to submit their comments to help advance the procedure.

The draft procedure is designed to remove barriers for multinational high-tech companies operating in Israel and to attract new companies by increasing tax certainty. It will establish a clear and uniform taxation framework for both multinational corporations already running R&D centers in Israel and those establishing new centers through the acquisition of Israeli companies.

This initiative is part of the economic plan approved by the government for 2025, which includes a series of measures to strengthen Israel’s high-tech industry and preserve its position as a global leader in technological innovation.

The high-tech industry plays a crucial role in the Israeli economy, serving as a primary driver of economic growth in recent years. It accounts for approximately 20% of Israel’s GDP and over 50% of its exports. High-tech employees contribute significantly to state revenues, representing over 30% of income tax payments. Multinational corporations also have a major impact on the Israeli economy, with around 500 multinational companies currently operating in Israel, employing approximately 90,000 people. These companies were responsible for nearly 90% of the total value of startup acquisitions in Israel in 2024.

The new procedure, alongside other measures in the 2025 economic plan, was developed through a joint effort by the Israel Tax Authority, the Chief Economist’s Division, the Budget Department, and the Israel Innovation Authority, following in-depth discussions with both local and global stakeholders. These economic measures, together with additional initiatives taken in recent years, aim to create an attractive tax regime. The underlying principle is that the more attractive, certain, and stable Israel’s tax laws are, the more companies and investors will thrive and contribute to the growth of the high-tech industry.

This step is part of broader initiatives in the 2025 economic plan, including a proposed law to ease corporate restructuring, allowing greater flexibility in mergers and split off activities. This proposal was recently approved by the Finance Committee and is expected to proceed to its second and third readings alongside the 2025 state budget and economic plan.

Minister of Finance, Bezalel Smotrich: “Investors today seek regulatory certainty and a business environment that fosters growth. Israel offers a unique advantage in research and development. The Israeli high-tech sector leads global innovation, and the initiative we are promoting will provide multinational companies with tax certainty and the necessary tools to expand their operations here. This is a significant step that will attract new investments, strengthen the local industry, and create high-quality jobs. In line with my policy, we are working to simplify regulations and reduce bureaucracy, recognizing that a business-friendly environment is a key driver of economic growth.”

Minister of Innovation, Science, and Technology, Gila Gamliel: “Today, we are laying another significant foundation in the national plan to advance Israeli high-tech, providing the stability and tax certainty needed for multinational companies operating in Israel. The R&D centers of these companies are a driving force behind economic growth and technological advancement. I am proud that, together with our partners in the Ministry of Finance and the Innovation Authority, we have led a strategic move that strengthens Israel’s innovation ecosystem and removes key barriers to its growth.”

Director of the Israel Tax Authority, Shay Aharonovitch: “The Israel Tax Authority will continue to seek ways, through legislative changes and internal procedures, to encourage multinational investments in Israel and support sustainable growth in the high-tech industry and the Israeli economy.”

CEO of the Israel Innovation Authority, Dror Bin: “Enhancing tax certainty is a crucial step in maintaining Israel’s attractiveness to multinational corporations. Global companies’ R&D centers play a vital role in the success of the Israeli high-tech industry, contributing to economic growth and strengthening the local ecosystem. The new procedure establishes a clear and transparent framework that will help attract further investments, encourage the acquisition of Israeli technology firms, and reinforce Israel’s position as a leading global hub for technological innovation.”