Israel's Gradual Tax Rate Reduction – Delayed

As part of the global tax competition, Israel has decided to join a large number of countries and to gradually reduce its tax rates on both individuals and companies in order to attract foreign investments and business enterprises.

In July 2009 an official Temporary Order was published, according to which the corporate income tax (CIT) rate is to gradually be reduced over several years to 18% in the tax year 2016 and the individual income tax (IIT) rate – to 39% in 2016.

This graduate tax rates reduction has attracted vast attention towards Israel, as a potential investments market, adding to this several other tax benefits, such as the Encouragement of Capital Investment Law and the 10-year tax holiday to eligible individuals (the 168 Tax Amendment). According to Amendment 168 Israel provides New Immigrants and Returning Residents (as defined by law) with extreme tax benefits, including a 10-year tax exemption on foreign sourced income and gains, as well as no