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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The financial year starts from 1 January and ends on 31 December of the same year.
Accounting Standards
Accounting in Israel started with the help of the "The American Institute of Certified Public Accountants "(AICPA). The accounting practices in these countries are similar to American practices. IFRS are extensively used.
Accounting Regulation Bodies
IASB
Accounting Reports
The financial accounts include a balance sheet, an income statement, a cash flow account and an owner's equity account.
Publication Requirements
Accounts have to be published annually.
Professional Accountancy Bodies
ICPA , Institute of Certified Public accountants in Israel
IFAC , International Federation of Accountants.
Certification and Auditing
Audit is carried out by external auditors in the company. KPMG, Pricewaterhouse Coopers, Deloitte. Ernst and Young : http://www.ey.com/Home
Accounting News
EIN Middle East accounting news.

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Tax Rates

Consumption Taxes

Nature of the Tax
VAT - (MA'AM in Hebrew)
Tax Rate
18%
Reduced Tax Rate
Export of products and certain services is not subjected to VAT.
Other Consumption Taxes
Tax on Capital gains from real-estate is applicable on the sale of the real estate.
Purchase tax is deducted on some imports or local industrial production. For additional information, consult the Finance Ministry.

Learn more about Service Providers in Israel on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
26.5%
Tax Rate For Foreign Companies
The resident companies are taxed on their total income, while the non-resident companies are taxed on incomes from activities in Israel.
Capital Gains Taxation
32% for shareholders holding 10% or more of any means of control of the company. In other cases: 27%.
Main Allowable Deductions and Tax Credits
Deductions are granted when the company invests in scientific research in the fields of industry, agriculture, transport or energy. A deduction is possible at the time of investments in oil companies. For additional information, consult the Deloitte Tax Guide.
Other Corporate Taxes
Access the 2012 Deloitte Tax Guide on Israel.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Israel Middle East & North Africa United States Germany
Number of Payments of Taxes per Year 33.0 19.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 235.0 184.0 175.0 207.0
Total Share of Taxes (% of Profit) 32.3 32.3 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

The rate is spread over 6 sections Progressive rates from 10% to a maximum of 50%
From ILS 1 to 63,360 10%
From ILS 63,361 to 108,120 14%
From ILS 108,121 to 168,000 21%
From ILS 168,001 to 240,000 31%
From ILS 240,001 to 501,960 34%
From ILS 501,961 to 811,560 48%
Over NIS 811,561 50%
Allowable Deductions and Tax Credits
Tax deductions are granted to residents of priority areas and far from the center of the country.
Special Expatriate Tax Regime
Certain expatriates are subjected to a special system with a maximum rate of 25%, other follow the normal system. Foreign residents are exempted from taxes on capital gains resulting from share investments in the Tel-Aviv Stock Exchange.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Israel has signed financial agreements with several countries in the world.
Withholding Taxes
Withholding tax rates are: 20/25% for dividends, 15/20/25% for interest and 25% for royalties.

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Sources of Fiscal Information

Tax Authorities
Fiscal Authority
Other Domestic Resources
WorldWide Tax on Israel

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Learn more about Taxes and Accounting in Israel on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
Israeli Patents Office of the Ministry of Justice for patents and copyrights.
Regional Organizations
Israel is signatory of European Convention on the International Classification of Patents for Invention and European Convention on patent formalities, as well as Universal Copyrights convention and the Lisbon convention. In any case, it is better that foreign patents are registered in Israel.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Law on patents (1978)
Validity period; 20 years
Trademark
 
Law on registered trademarks (1998)
Validity period; 10 years Trademark Law Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Law on industrial designs (1992)
Initial validity period; 5 years  
Copyright
 
Law of 1911 and Order on the copyrights
For the lifespan of the author and 50 additional years for musical artistic works and 70 additional years for literary works. WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty

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Legal Framework

Independence of Justice
The judicial power is largely independent in Israel and the guarantees of procedure are generally respected.
Equal Treatment of Nationals and Foreigners
Foreign nationals can be expected to benefit from a equitable legal process.
The Language of Justice
The legal language of the country is Hebrew but Arabic is also used officially by the Arab minorities of the country .
Recourse to an Interpreter
Yes
Sources of the Law and Legal Similarities
Israel does not have written constitution. Certain functions of the constitution are fulfilled by Declaration of Establishment (1948), the Basic laws of the parliament and the Israeli citizenship law. The legal system is a blend of Common English Law and British Mandate Regulations. Israel no longer accepts the compulsory jurisdiction of ICJ.
Checking National Laws Online
Lexadin, the world law guide

Learn more about Lawyers and Legal in Israel on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
The Standards Institution of Israel (SII)
Integration in the International Standards Network
Online Consultation of Standards
The Standards Institution of Israel (SII)
ISO Catalogue
Certification Organizations
The Standards Institution of Israel

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Business Practices

General Information
Doing Business with Israel
Guide to Israel
Opening Hours and Days
The weekend in Israel is on Friday and Saturday. Offices close at 1700 hrs in the evening.
 

Public Holidays

Passover (1st Day) March
Passover (Last Day) April
Purim (carnival) March/April
Independence Day of Israel May
Shavouth (Pentecost)  May/June
Rosh Hashana (New Year) September/October
Yom Kipour (Day of Atonement) October
Souccoth (Festival of Huts) October
Simhat Torah, start of the reading of the Torah October
Hanukkah (Festival of Lights) End November/December
 
 

Periods When Companies Usually Close

Days of Jewish Festivals
Period of Pessah (Easter) April
Period of Souccoth (Festival of Huts) October
 

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Last Updates: December 2014