Country GuideIsrael

From Global Connections

Israel is internationally recognised as a seat of innovation and creativity, noted for its thriving entrepreneurial spirit and pioneer technologies. It was ranked 3rd most innovative country in the world according to the 2015 - 2016 WEF Global Competitiveness Report.

Complimented by an unusually high availability of scientists and engineers (ranked 8th in the world according to the 2015 - 2016 WEF Global Competitiveness Report), Israel’s scientific excellence makes it a preferred hub for leading multinationals to establish their Research and Development (R&D) centres.

Foreign direct investment (FDI) inflows into Israel reached USD4.6 billion in 2014 according to UNCTAD's 2015 Global Investment Report.

Israel ranked 53rd in the World Bank's 2016 Doing Business rankings, falling from 50th in the year prior. Israel’s primary strength was in the Protecting Minority Investors topic where it ranked eighth in the world. The rankings recognised that Israel made paying taxes more costly for companies by increasing the corporate income tax rate, the rate for social security contributions paid by employers for the upper wage bracket and municipal taxes.

Key facts about starting a business in Israel:

  • It takes five procedures and approximately 13 days to start a new business in Israel; this process is detailed in the Doing Business in chapter
  • Employers that wish to employ foreign employees must apply to the Authority of Immigration in writing; employment regulations are discussed in detail in the Labour chapter
  • Companies must file financial statements in accordance with Israeli GAAP (exceptions exist for publicly traded companies and banks); further details can be found in the Audit chapter
  • Amongst other requirements, companies that wish to list securities on the Tel Aviv Stock Exchange must have been operating for a minimum of 12 months; this is discussed further in the Finance chapter

While Israel's attractiveness as an investment location can be attributed to a number of factors, including its liberal investment policy and high investment in research and development it is important to understand the nuances of any local regime. The manner in which people conduct business in Israel may differ from the home countries of investors. Furthermore, variations on these distinctions may exist depending on the regions and the industry in which a company operates.

Hebrew and Arabic are the official languages of Israel, although English is widely spoken and is the lingua franca of business. Business attire is typically smart-casual. A handshake is the typical business greeting and will be used at the beginning of a meeting. Business cards may be presented after initial introductions. Gift giving is not expected as part of business interactions.

Those looking to establish a business in Israel may look across alternative options. However, Israel can be differentiated on the following factors:

  • Economic stability with an annual growth of two to three per cent and unemployment under six per cent
  • The World Bank rated Israel's judicial processes 14 out of 18, above the OECD high income average of 11; details of the country's judicial processes can be found in the Legal overview chapter
  • Tax relief is granted to companies located in a National Priority Region; this is further detailed in the Tax chapter
  • Israel ranked third in the world for Innovation in the WE Forum Global Competitiveness Report
  • The Israeli government provides a number of incentives to provide support for R&D collaboration; discussed further in the Trade chapter
  • Israel has three modern deep-water harbours at Haifa, Ashdod and Eilat which serve international shipping needs; discussed further in the Infrastructure chapter

While there are significant benefits for investing in Israel, a number of potential challenges remain. The domestic market is relatively small and is characterised by high competition. Foreign investors may find that the cost of doing business is relatively expensive when compared to other OECD destinations.

This guide has been developed to provide businesses with an overview of Israel, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in Israel. However, the information contained in this document is generic in nature and you should not act or rely on it without obtaining specific professional advice.

Please note that the Country Guides may only be available in English.

Useful Links

1 Israeli Corporations Authority
2 Ministry of Finance
3 Ministry of Foreign Affairs
4 Israel Patent Office
5 Israeli Law, Information and Technology Authority
6 Ministry of Economy and Industry

 

Sources

1 FDI Statistics
2 Doing Business Rankings
3 Global Competitiveness Report

 

Download Country Guide - Israel (2.83MB, PDF)

Disclaimer

This document is issued by by HSBC Bank plc, Israel Branch (the Bank). This guide is a joint project with Grant Thornton. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. Whilst every care has been taken in preparing this document, the Bank and Grant Thornton makes no guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or Grant Thornton be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and are subject to change without notice. The materials contained in this document were assembled in January 2016 and were based on the law enforceable and information available at that time.

Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International Ltd (GTIL) and its member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. This publication has been prepared only as a guide. No responsibility can be accepted by GTIL for loss occasioned to any person acting or refraining from acting as a result of any material in this publication.

HSBC retains all responsibility for the translation of the content of this guide. In the event of any discrepancy or inconsistency between the English and translated versions of this Guide, the English version shall apply and prevail.

You are leaving the HSBC Commercial Banking website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.

You are leaving the HSBC CMB website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.