What's Happening?
The Knesset has approved the 2026 state budget, including new tax incentives for research and development to attract high-tech investment. The Research and Development Encouragement and Incentive Law aims to preserve Israel's status as a destination for high-tech companies
amid global tax changes. Eligible companies will receive direct tax credits for R&D expenses, with enhanced benefits for firms in Israel's periphery and major tech enterprises. The measure is part of a broader economic package designed to support innovation and knowledge-intensive activities, ensuring Israel remains competitive in the global market.
Why It's Important?
The new R&D tax incentives are crucial for maintaining Israel's competitive edge in the high-tech sector, especially as international tax reforms reshape incentive regimes worldwide. By offering direct tax credits, the government aims to encourage companies to expand operations, hire more technology workers, and deepen local investment. This approach supports innovation and economic growth, positioning Israel as a leader in high-tech development. The incentives also address the challenges posed by tightening multinational tax rules, ensuring that Israel remains an attractive destination for high-tech investment.
