The government agreed on a basket of benefits for the advancement of the Israeli high-tech industry

The Prime Minister, the Minister of Finance and the Minister of Innovation agreed on a basket of benefits for the advancement of the Israeli high-tech industry. The government will promote three legislative amendments designed to strengthen and promote Israeli high-tech as a key engine of growth in the economy.
The Ministry of Finance has issued a memorandum of law for public comments that includes three legislative amendments:
1. "Angel Law": granting a tax credit to an investor in a start-up company. This is first and foremost in order to encourage first-round investments ("pre seed" and "seed") in start-up companies, which are characterized by the highest risk, in order to ensure that companies are established in Israel that will constitute the future of the industry.
The purpose of the benefit is to encourage investment in small companies that are in the initial stages of research and development, which have not benefited from the current tide in the industry in the same way as older companies, among other things in light of venture capital funds investing in more advanced companies.
This, at the same time as the costs of setting up a start-up have risen in recent years against the background of rising wages in the industry, which increases the investment amounts needed by companies at these stages.
The benefit will be expressed in a number of components, including eligibility for the benefit to a green route (eliminating the need for a preliminary approval), expanding the definition of investment to 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, it is proposed to allow an individual to defer tax on capital gains on profits generated from the sale of technology shares against an investment in the company in the early stages, in order to encourage high-tech entities to add value to the investment company. New companies.
Recognition of the acquisition of a company as a tax-recognized expense: A tax benefit for a high-tech company that acquires another high-tech company. This is in order to encourage Israeli companies considering acquisition or merger, to leave the intellectual property in Israel and to leave Israel as the basis of the subsidiary.
Simplifying the bureaucratic procedure in order to be eligible for the benefit, and at the same time, in order to enable the growth and intensification of Israeli high-tech companies, it is proposed to extend the benefit also for the acquisition of foreign high-tech companies to encourage the growth of companies in Israel.
3. Encouraging loans: A tax exemption for a foreign financial institution in respect of a loan granted to technology companies. This is in order 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 to raise capital while diluting the holdings of Israeli entities in companies, for the benefit of foreign investors.
Therefore, it is proposed to grant a foreign financial institution an exemption from the payment of interest, discount fees or linkage differences, which it is required to pay following the granting of a loan to an Israeli technology company. Large Israeli high-tech companies, interested in continued growth, need high amounts of financing and the proposed exemption will help lower the costs of raising credit and taking it by the Israeli entity, as a substitute for taking credit from a foreign source or turning to raising capital and diluting holders.
Prime Minister Naftali Bennett: "The package of measures is intended to encourage the growth of Israeli high-tech companies through the removal of barriers and unnecessary regulation. I believe that these important measures will promote the business environment in the industry and support the preservation of Israeli high-tech companies in the country." Israel.
The high-tech industry is the arrowhead of the Israeli economy and as such has a strategic role. Israeli innovation is a source of national pride. As the Prime Minister of Israel, and as someone who knows the industry closely, I will continue to advance steps that will enable the industry to advance, and preserve Israel as a "start-up" nation.
The Minister of Finance, Avigdor Lieberman: "The high-tech industry is of strategic importance to the strength of the Israeli economy, which has been more pronounced over the past year and a half. The current situation in the high-tech industry is in favor of extracting the economic value inherent in it. "
Minister of Innovation, Science and Technology Orit Farkash HaCohen: "Today we published an important legislative memorandum that we promoted in the government for the benefit of the high-tech industry in Israel on the eve of the budget.
These amendments are important for Israel's thriving high-tech industry, the locomotive of the Israeli economy emerging from the corona crisis. The legislation will remove further barriers to the Israeli high-tech industry: it will encourage investments in the field, encourage the establishment of new high-tech companies and contribute to their stay in Israel. This step joins a series of steps I have taken to strengthen the industry and reach a national goal of 15 percent employment in high tech.
I am committed to continuing to strengthen this important industry that is facing tough global competition and harnessing its prosperity for the benefit of the public. "