35 Israel’s Tech Tax Reforms Israel has introduced a sweeping reform to its tax framework for the high-tech and venture capital sectors, aiming to clarify rules around fund management, IP valuation, and incentives for returning talent. We asked IsraelDesks members to offer their superstar analysis of the changes, which are designed to strengthen Israel’s position as a global innovation hub while ensuring greater transparency and competitiveness for international investors. Removing barriers, reducing uncertainty A central theme of the reform is certainty - especially for multinationals and cross-border investors, who previously had to navigate a patchwork of rulings and informal practices. “The reform provides regulatory certainty and beneficial tax treatment to the major players in the Israeli high-tech ecosystem, including giant multinational companies, venture capital funds and other types of tech investors in the Israeli technology market, and tech workforce talent,” says Meir Linzen, Chairman of Herzog Fox & Neeman (“Herzog”), and head of its Tax, Private Client, Gaming & Gambling Departments. One of the reforms’ key aspects: clarification of how income is attributed to Israeli R&D centers. “A recent publication by the Israel Tax Authority (ITA) provides multinational companies active in the sector with clear rules on the income attributed to their Israeli R&D centers, often employing thousands of engineers in Israel,” adds Dr. Yuval Navot, head of Herzog’s Corporate Tax Department. “The publication clarifies that the income attributed to Israel will be subject to the ‘cost-plus’ method and that the ITA will not be inclined to treat
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