According to the definition of the high-tech sector and of high-tech companies
There are several accepted approaches used to define the companies and employees of the high-tech sector in Israel. The definitions differ from each other in the number and type of companies they include. Consequently, there are also variations in the number of employees and their related payments. Furthermore, different methods exist for collecting data (administrative data which presents real figures as opposed to surveys which present estimates) and there are differences in the frequency that data is updated.
In this report, we focus on two definitions of the high-tech sector to estimate its contribution to state revenues, while using administrative data. The first of these is the definition of “the high-tech sector” as accepted by the CBS. According to this definition, as of 2021, 13,837 companies reported employing workers, of which 309 were foreign companies, with a total of 285,000 full-time jobs (not including the communications sector). A second definition we use is that of technology companies and is based on SNC and IVC databases. 8144 companies are included in this definition, of which 552 are foreign companies, with a total of 255,000 full-time jobs (in 7,916 companies that reported employing workers). Throughout this report, we will refer to this definition as “the high-tech companies“.
Evaluation of High-Tech’s Contribution
The definition of the high-tech sector we will use later in the report will be in accordance with the accepted international standards, with one main variation – we omit the communications sector and do not include it in the definition of the high-tech sector1Omitting the communications sector is in accordance with the recommendations of the Kandel Committee for improving the high-tech data infrastructure in Israel. The committee’s report can be seen here. The definition of the high-tech companies attempts to focus on and identify the high-tech companies operating in Israel according to important external databases. Appendix 1 includes detailed information about each of the definitions and the differences between them. In light of the limitation of the different figures in each definition, we will note which one was used alongside each analysis (the definition of “the high-tech sector” which represents the CBS definition or the “high-tech companies” definition that is based on the SNC and IVC databases).
As noted, the most up-to-date information pertaining to tax payments in Israel available when this report was prepared refers to 2021, due to the timing of reports submitted to the tax authorities. Some of the segmentations are unavailable for this year and we have therefore used the most up-to-date data available for each analysis. If the most up-to-date year for analysis was the Covid year (2020), we have made every effort to add data about the long-term trend2Throughout this report, unless explicitly stated otherwise, the term “income tax” refers to income tax from salaried employees.
