Opening a business In Israel: What you need to know

The Israeli government is very open when it comes to business investments. Grants and loans are offered regularly to both domestic and foreign startups.

July 29, 2018 14:40
2 minute read.

Tsofen encourages the establishment and development of hi-tech centers in major Arab cities and communities.. (photo credit: Courtesy)


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Israel is a young country that offers a lot of opportunities. Not only does it have one of the highest living standards in the entire Middle East but it’s also the sole democracy in the region. If that wasn’t enough, its alliance with western powers is a good example of its importance. When it comes to business, Israel has a well-developed infrastructure. Moreover, it’s the country that has the largest number of engineers and scientists, based on its total population.

In the past years, companies such as Microsoft, IBM, Intel, Siemens, and Motorola, have opened regional offices here. No wonder this happens. The Israeli government is very open when it comes to business investments. Grants and loans are offered regularly to both domestic and foreign startups.

Country Overview

There are approximately 9 million people living in Israel today. The vast majority of them are of working age, meaning that if you’re planning to open a business that requires employees, you’re in luck. Only 4% are unemployed but this doesn’t mean you won’t be able to find the right candidate.

One of the advantages of starting a business in Israel is the absence of a language barrier. English is the country’s second most common language and is spoken by the majority of its residents. In fact, almost everything is translated in English: official signs, restaurant menus, business services, etc.

Economy Overview

Israel has been classified as one of the world’s developing economies by the World Bank. similar to other western countries, Israel nurtures a mixed market economy that allows its residents to enjoy a high standard of living. Thanks to numerous pledges from the Israeli government, there are little to no infrastructure problems. Everything from roads, rails, and airports, to power generation and supply are effectively taken care of.

More than 4% of Israel’s GDP is directed towards infrastructure research and development. The biggest goal of this investment is to keep Israel’s competitive advantage in the startup market. High-tech companies are increasing in numbers, while the more traditional companies are seeing a decrease.

Smart Tech

Technology can’t be ignored. This is something that Israel’s business sector understands. Overall, businesses increase their investment in smart tech. Everything from analytical tracking and task managing to customer support and internal communication is now automated. If it isn’t, companies are already looking for solutions.

This new approach can be seen in the success of companies such as Intel, Checkpoint, or Comverse. Thanks to these well-established companies and newer startups, Israel is now one of the top 10 destinations for venture capital investments. The benefits can be seen in the contribution of companies to the GDP.

Grants And Taxes

There are several benefits that can be acquired by startups. The biggest one is the tax holiday that comes with the grant program. If a business is awarded a grant, it becomes eligible for becoming a privileged enterprise. This means that the business can apply for a tax holiday. Anywhere between 2 and 15 years of tax breaks can be awarded based on the location of the business and its ownership.

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