Intel to receive $300m in gov’t grants for $6b Israel investment

Company to pay 5% tax rate for ten years.

September 22, 2014 19:48
1 minute read.
Intel’s offices in Petah Tikva

Intel’s offices in Petah Tikva: Intel Israel accounts for a fifth of the country’s high-tech exports.. (photo credit: REUTERS)


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The Economy and Finance ministries on Monday approved a five-year, $300 million benefits package for the Intel corporation, in support of its $6 billion plan to upgrade its Kiryat Gat factory.

“Confirmation of Intel’s coming to Israel with the largest investment in Israel’s history is a historic event for all residents of the country, but especially for residents of the South, hundreds of whom will be employed in the new factory,” said Economy Minister Naftali Bennett.

The company will hire 1,000 workers and indirectly employ another 2,500, and agreed to $550m. of reciprocal procurement, as well as NIS 180m. of local procurement a year. It will only have to pay 5 percent in corporate taxes through 2023.

Finance Minister Yair Lapid called the investment a “strategic asset” for Israel.

The state has laid out specific benchmark criteria to track the company’s compliance over time, a first for such a grant. The criteria include commitments to maintain certain employment levels, employing a certain number of people from the South, investing in academic institutions, and seeking Israeli contractors.

Israel had been in fierce competition with Ireland to persuade the chip maker to produce the company’s newest technology, 10 nanometer chips, in the Holy Land. Kiryat Gat currently produces 22-nm chips, but Intel built its last plant, for 14-nm chips, in Ireland.

In April, Intel announced that it would be making the investment in Israel, signing a memorandum of understanding on its plans and submitting a formal application for the grant.

Though the news is welcome now, the low tax rate is likely to surface in political debates. Last year, a scandal broke over revelations that the top four companies in Israel paid an average of 3% in corporate taxes and ate up 70% of the total tax breaks.

Intel was among them.

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