Israel offers substantial tax breaks for "Privileged Enterprises" and "Approved Enterprises" under the Law for The Encouragement of Capital Investments, 1959. In brief, Israeli companies in industry, hi-tech, life sciences and tourism may enjoy company tax rates of 0 percent to 25% and dividend withholding tax rates of 0% to 15%, resulting in total Israeli taxes on distributed profits of 0% to 36.25%. To claim these Privileged Enterprise tax breaks, an Israeli company must effect a minimum investment (NIS 300,000 for a new enterprise, more for an existing one) within three years ending on the last day of the year first claimed for a project and be ready to export at least 25% of its sales, unless it is engaged in biotechnology or nanotechnology. A claim is then attached to the tax return of the year first claimed for a project - no bureaucracy. In recent times, banks' and investors' finance has dried up in many countries due to the credit crunch. Suppose a company needs fixed-asset grants as well as tax breaks? The company may apply to the Industry, Trade and Labor Ministry's Investment Center for "Approved Enterprise" status instead; this confers eligibility to fixed-asset grants of 10% to 32%, but only if the enterprise is located in a "Development Area." As a quid pro quo, company tax rates range from 10% to 25% and the 0% rate is not available. Recently, the Investment Center published it rules for approving grants out of the 2008 budget. Applications had to be made by October 15, 2008. Any applications filed after then will only be considered in 2009. According to the new rules, the minimum conditions are: annual revenues not more than NIS 250 million; no more than 250 employees in Development Area A; and planned investment not more than NIS 2m. per new employee. Applications not meeting these minimum conditions will be approved only in exceptional cases. Thereafter, grant applications will be rated according to the following criteria: location of the plant and how far away it is from central Israel; average monthly wage of all employees in the plant; socioeconomic classification of the area; bank appraisal or business plan indicating high degree of competitiveness; financial stability and proven ability; past approved projects met their goals; ratio of new employees relative to the actual investment; employment of categories of people with below average representation in the work force. If approved, the total grant will not be more than NIS 20m. Of this, 65% will be paid during the period of the investment based on progress reports filed. The remaining 35% is payable after the final performance report is filed, provided at least 75% of the goals set have been met, pro rata to attainment of these goals. Finally, note that research and development grants may also be available from the Office of the Chief Scientist or from various binational funds Israel has set up with foreign governments - typically at a rate of 50% of approved R&D expenditure. As always, consult experienced legal, tax and financial advisers in each country at an early stage in specific cases. firstname.lastname@example.org Leon Harris is an international tax specialist.