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Doing Business in Israel 2016

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Doing Business in Israel 2016 Doing business in Israel 2016 In association with: 1 Contents Introduction ................................................................................................................................................................................ 3 – Country profile ................................................................................................................................................................... 4 Legal overview ........................................................................................................................................................................... 5 Conducting business in Israel ..................................................................................................................................................... 9 Tax system ................................................................................................................................................................................11 Labour ...................................................................................................................................................................................... 18 Audit ......................................................................................................................................................................................... 21 Trade ......................................................................................................................................................................................... 22 Finance ..................................................................................................................................................................................... 23 Infrastructure ............................................................................................................................................................................ 25 This Guide has been prepared jointly by HSBC Bank plc, Israel Branch and Grant Thornton for the purposes of providing a high-level general overview of the business environment in Israel for the information of businesses who may be interested in transacting or investing in Israel. Any transaction or investment in Israel, however, should only be undertaken based on professional advice specific to such transaction or investment. 2 Introduction This guide to doing business in Israel will provide foreign investors with an insight into the key aspects of undertaking business and investing in Israel. Israel is a highly developed, western-oriented market currently experiencing strong economic growth, despite political tensions. Israel’s economic growth has Competitiveness Report), Israel’s • Renowned education system historically been strong, averaging scientific excellence makes providing a highly educated 3.80 per cent from 1996 until 2015. it a preferred hub for leading workforce The economy grew at a moderate multinationals to establish their • World-class capacity for pace in 2015 but is projected to pick Research and Development innovation, strong technical up to around 3.25 per cent in 2016 (R&D) centres. knowledge and entrepreneurship 1 and 2017 . • Strong venture capital industry Foreign investment has played and favourable financial a key role in Israel’s economic The country’s major industrial environment for start ups sectors include high-technology growth. The government actively • Large network of Free Trade products, metal products, electronic encourages foreign investment and Agreements and biomedical equipment and provides a number of incentives under the Encouragement of • Extensive tax reliefs available pharmaceuticals. Furthermore the Capital Investments Law 1959. under the ‘Encouragement of Israeli diamond industry is one of Moreover, there are no restrictions Capital Investment Law’ the world’s centres for diamond on foreign investments except in cutting and polishing. Israel is the industry sectors of defence and While this guide makes reference internationally recognised as a seat telecommunications. to some of the most common of innovation and creativity, noted for issues investors might face, it must its thriving entrepreneurial spirit and A recently discovered Leviathan gas be noted that certain industries, pioneer technologies. The country field is one of the world’s largest such as the financial services sector, was ranked 3rd most innovative offshore natural gas finds in the are subject to special regulation country in the world according past decade, and together with the and therefore companies wishing to the 2015 - 2016 WEF Global nearby Tamar gas field, they present to invest in this area should seek Competitiveness Report. an opportunity for Israel to become legal advice. a major regional energy player. Complimented by an unusually The information in this publication is high availability of scientists Key advantages for businesses current at January 2016. and engineers (ranked eighth considering foreign investment in the 2015 - 2016 WEF Global in Israel: 1 OECD Economic Forecasts 3 Country profile Capital City Jerusalem Area 20,770 sq. km Population 8.059 million Language Hebrew, Arabic Currency Israeli new shekel (ILS) International dialling code + 972 National Holidays 2016 24 March – Purim (Celebrated one day later in Jerusalem and all other ancient walled cities) 24 April – Passover begins 30 April – Last day of Passover 12 May – Independence Day 13 June – Pentecost 14 August – Fast of Ninth Av 3 – 4 October – New Year 12 October – Day of Atonement 17 October – Sukkot 25 October – Simchat Torah Business and Banking hours Sunday to Thursday: 08:30 to 18:30 Friday: 08:30 to 14:00 Stock exchanges The Tel Aviv Stock Exchange (TASE) Political structure Parliamentary Democracy Doing Business rank 2016 53 Ease of Doing Business Topics 2016 rank 2015 rank Change in rank Starting a business 56 51 -5 Licenses and Permits 96 91 -5 Getting Electricity 91 83 -8 Registering property 127 128 1 Financing 42 36 -6 Protecting Investors 8 8 No change Paying Taxes 103 95 -8 Trading Across Borders 58 56 -2 Enforcing Contracts 77 77 No change Resolving Insolvency 29 27 -2 Source: World Bank Group (Doing Business) 4 Legal overview Political and legal system the Knesset and to new elections to Knesset”, “The Government”, Israel is a parliamentary democracy the Knesset. “The Army”, “The President of the consisting of legislative, executive State”, “The State Comptroller”, and judicial authorities. The system The judicial branch is independent “Human Dignity and Liberty” and is based on the principle of the from the government. Judges are “Freedom of Occupation” which separation of powers, in which the appointed by the president for life, have a special standing requiring a executive authority is subject to with retirement at 70 according to special majority to be changed. A the confidence of the legislative the election of a special committee. “regular law” cannot contradict a authority and the independence of The members of the special Basic Law and the High Court of the judiciary is guaranteed by law. committee are three judges of Justice has the power to cancel the Supreme Court, two Knesset such contradicting laws. The President is the head of members, the minister of justice and state but the position is largely an another minister and two delegates Data protection apolitical and ceremonial role. The of the Israeli Bar Association. The Privacy is recognised as a president is elected by a simple court system comprises special constitutional right in Israel as part majority of the Knesset (Israel’s courts (dealing with family matters of the Rights of Human Dignities unicameral parliament) members for or economic issues), magistrates’ and Liberty. Furthermore, the only one period of seven years. After court, district courts and the Privacy Protection Act (PPA) each election to the Knesset, the Supreme Court (that acts as the contains specific provisions president nominates the head of the Supreme Court of appeal and as regarding data protection. biggest political party to establish a the Supreme Court of justice). government (or the party that has Furthermore, jurisdiction in matters The competent national regulatory the largest power to establish a of personal status is vested in authority is the Israeli Law, government) and such person shall judicial institutions of the respective Information and Technology become the Prime Minister. religious communities. Authority (ILITA). The Knesset is the country’s Civil court orders and judgments are Personal data is defined as legislative body. It is comprised usually enforced by the Authority ‘details concerning an individual’s of 120 members, elected for a of Enforcement and Collection. The personality, personal status, intimate maximum of four-year terms in a Israeli law enables the enforcement relations, health condition, financial general, national and confidential of foreign judgments. condition, vocational qualifications, election process. The Knesset opinions and religious belief’. Before has the power to enact and repeal The Israeli legal system encourages the processing of any personal all laws. settlements of disputes through data, consent must be obtained mediation and arbitration and from the data subject; this may be The executive branch is the recognises the parties’ agreement implied. The collection of personal government which is formed of the to appeal on an arbitrator ruling data must be accompanied by a cabinet of ministers
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