Tax & International Structuring in Israel

Essentials guide · Source-checked research73% of statements checked against a source9 checked against an official source32 checked against a secondary sourceChecked 2026-10-195 held back until checked against an official source8 topics include AI-written statements, not source-checkedNot yet professionally reviewed

• The standard corporate income tax rate is 23% for 2026, unchanged from 2025.

  Resident companies on worldwide income; non-residents on Israeli-source income. Reduced regimes apply to qualifying enterprises. A qualified domestic minimum top-up tax applies to multinational groups with annual global revenue of at least EUR 750 million where the Israeli effective tax rate is below 15%, for tax years beginning after 31 December 2025.PwC Worldwide Tax Summaries · checked 2026-10-19

• The standard VAT rate is 18%, raised from 17% with effect from 1 January 2025.

  Most supplies of goods and services in Israel. Financial institutions pay a VAT-equivalent wage and profit tax, which rose to 18% on the same date; non-profit organisations pay a wage tax instead of standard VAT.Herzog Fox & Neeman · checked 2026-10-19

• The Law for the Encouragement of Capital Investments provides reduced corporate tax rates for qualifying preferred enterprises and preferred technology enterprises, with lower rates in development area A.

  Preferred enterprise: 7.5% in development area A, 16% elsewhere. Preferred technology enterprise: 7.5% in development area A, 12% elsewhere, on qualifying IP income developed in Israel, for groups with annual revenue below ILS 10 billion. Special preferred enterprises: 5% or 8%. Eligibility conditions apply.PwC Worldwide Tax Summaries · checked 2026-10-19

• Israel levies withholding tax on dividends, interest and royalties paid to non-residents, which may be reduced under Israel's double tax treaties.

  Domestic rates for non-resident companies: dividends 25% (30% for a substantial shareholder, generally a holder of 10% or more), interest 23%, royalties 23%. Tax is generally withheld from all remittances abroad unless the recipient obtains a certificate from the Israel Tax Authority authorising an exempt or reduced-rate remittance.PwC Worldwide Tax Summaries · checked 2026-10-19

• The Israel Innovation Authority (formerly the Office of the Chief Scientist) provides incentives for research and development.

  Funded know-how may be subject to conditions on transfer of intellectual property or production abroad.Auren · checked 2026-10-19

• Customs duties and import VAT are administered by the customs directorate of the Israel Tax Authority.

  Goods moving between Israel and the Palestinian territories are covered by a separate customs arrangement.AI-written, not source-checked

• Israel requires an allocation number from the Israel Tax Authority on business-to-business tax invoices above a threshold for the buyer to deduct input VAT.

  The threshold was NIS 25,000 (excluding VAT) in 2024 and NIS 20,000 for invoices dated from 1 January 2025, with further reductions planned. Without a number the buyer cannot deduct the input tax.Herzog Fox & Neeman · checked 2026-10-19

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