The Ministerial Committee for Legislative Affairs today (Sunday) approved a memorandum of law that includes three legislative amendments intended to strengthen and promote Israeli high-tech as a key engine of growth in the economy:
Recognition of the acquisition of a company as a tax-recognized expense: The recognition will be made in order to encourage Israeli companies considering acquisition or merger, to leave the intellectual property in Israel and thus make Israel the basis of the subsidiary. The amendment to the legislation includes simplifying the bureaucratic procedure in order to be eligible for the benefit, and it is also proposed to extend the benefit for companies acquiring foreign high-tech companies in order to encourage the growth of Israeli high-tech companies.
Encouragement of loans: A tax exemption for a foreign financial institution in respect of a loan granted to technology companies. This step is intended to diversify the sources of financing available to high-tech companies, and to allow Israeli companies to raise local debt as an alternative to raising debt abroad or raising capital while diluting the holdings of Israeli entities in companies, for the benefit of foreign investors. Discount fees or linkage differences, which are required to be paid following the granting of a loan to an Israeli technology company. To the channel of raising capital and diluting the holders.
3. Tax credit for investment in a start-up company: Investments in start-up companies, which are characterized by the highest risk, will enjoy tax benefits, in order to encourage investments that will lead to the establishment of these companies in Israel. The benefit will be expressed in a number of components: turning eligibility for the benefit into a green route (eliminating the need for preliminary approval), expanding the definition of investment for investment through the allotment of shares, limiting the investor’s qualifying investment to NIS 3.5 million and changing the reporting responsibility mechanism. Also, as an alternative to the credit track, the amendment to the law proposes to allow an individual to defer payment of capital gains tax, on any profit generated from the sale of technology shares against an investment in a company in the early stages. This amendment was made with the aim of encouraging high-tech factors to return the money into the industry, for the germination of a new generation of companies.
The Minister of Finance, Avigdor Lieberman: “The high-tech industry is of strategic importance to the strength of the Israeli economy, which has been reflected, even more, in the past year and a half. The law is intended to enable the economic value of the high-tech industry The Finance Committee, MK Alex Kushnir and MK Vladimir Blyak for their cooperation in advancing this important move. “