Starting a Business in Israel

By in
323
Starting a Business in Israel

Israel is widely considered to be one of the most advanced countries in Southwest Asia in both economic and industrial development. With a robust and growing economy, the country is a leading exporter of technology and pharmaceuticals, with the world’s largest number of start-ups and NASDAQ-listed companies in the world outside of North America.

Economy of Israel

Israel is considered the most advanced country in Western Asia and the Middle East in economic and industrial development. Israel’s quality university education and the establishment of a highly motivated and educated populace is largely responsible for spurring the country’s high technology boom and rapid economic development. In 2010, it joined the OECD. The country is ranked 16th in the World Economic Forum’s Global Competitiveness Report and 54th on the World Bank’s Ease of Doing Business index. Israel was also ranked 5th in the world by share of people in high-skilled employment.

Israeli diamond industry is one of the world’s centers for diamond cutting and polishing

The country’s major economic sectors are high-technology and industrial manufacturing; the Israeli diamond industry is one of the world’s centers for diamond cutting and polishing, amounting to 23.2% of all exports. Relatively poor in natural resources, Israel depends on imports of petroleum, raw materials, wheat, motor vehicles, uncut diamonds and production inputs, though the country’s nearly total reliance on energy imports may change in the future with recent discoveries of natural gas reserves off its coast on the one hand and the leading role of the Israeli solar energy industry on the other.

Israel has the second-largest number of startup companies in the world after the United States, and the third-largest number of NASDAQ-listed companies after the U.S. and China. Intel and Microsoft built their first overseas research and development facilities in Israel, and other high-tech multi-national corporations, such as IBM, Google, Apple, Hewlett-Packard, Cisco Systems, Facebook and Motorola have opened research and development centres in the country. In 2007, American investor Warren Buffett’s holding company Berkshire Hathaway bought an Israeli company, Iscar, its first acquisition outside the United States, for $4 billion.

Israel Economic Indicators

Israel GDP Growth Rate

The main driver of Israeli economy is science and technology sector. As such, despite limited natural resources, its manufacturing and agriculture sectors are highly developed. .The biggest sector of the economy is services, accounting for nearly 80 percent of GDP. Within services, the most important are finance and business (28 percent of GDP); government (17 percent of GDP); housing (12 percent of GDP); trade, accommodation and restaurants (10 percent of GDP); and transport, storage and communications (8 percent of GDP). Manufacturing sector has been losing importance in recent years and now accounts for 14 percent of GDP.

Israel GDP Growth Rate
Source: Central Bureau of Statistics, Israel
Israel Interest Rate

In Israel, the interest rates decisions are taken by the Bank of Israel. The official interest rate is the “headline” rate.

Israel Interest Rate
Source: Bank of Israel
Israel Inflation Rate

In Israel, the most important categories in the consumer price index are Housing (25.2 percent of the total weight) and Transport and Communication (20.6 percent). Food accounts for 16.5 percent; Education, Culture and Entertainment for 11.7 percent and Dwelling Maintenance for 9.7 percent. Others include: Health (5.2 percent); Miscellaneous Goods and Services (4.3 percent); Furniture and Household Equipment (3.7 percent) and Clothing and Footwear (3.1 percent). The national index has a base of 100 as of 2012.

Israel Inflation Rate
Source: Central Bureau of Statistics, Israel
Israel Unemployment Rate

In Israel, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.

Israel Unemployment Rate
Source: Central Bureau of Statistics, Israel
Israel Government Dept to GDP

Israel recorded a government debt equivalent to 59.90 percent of the country’s Gross Domestic Product in 2019. Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields.

Israel Government Debt to GDP
Source: Bank of Israel
Israel Balance of Trade

Israel has been recording trade deficits since 1959 mostly due to a lack of natural resources. Indeed, Israel major imports are: oil and other mineral fuels and uncut diamonds. Main exports are: cut diamonds, pearls and other precious metals and stones; electrical machinery and equipment, mechanical machinery and appliances and electronics. Israel´s main trading partner is the United States (28 percent of total exports and 12 percent of imports). Others include: Hong Kong, China, Belgium, Netherlands, Germany and United Kingdom.

Israel Balance of Trade
Source: Central Bureau of Statistics, Israel
Israel Currency Shekel

The USDILS spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the ILS.

Israel Currency Shekel

Israel Stock Market (TA-100)

The Tel Aviv 100 Index is a major stock market index which tracks the performance of 100 companies with highest market capitalization listed on the Tel Aviv Stock Exchange. It is a capitalization-weighted, total return index. The TA-100 has a base value of 100 as of December 31, 1991.

Israel Stock Market TA-100
Israel Stock Market TA-100
Israel Ease of Doing Business

Israel is ranked 35 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Israel improved to 35 in 2019 from 49 in 2018. The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operationstronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.

Israel Ease of Doing Business
Source: World Bank
Israel Business Confidence

Business Confidence in Israel decreased to -0.10 points in October from 4.10 points in September of 2020.

In Israel, the Business Tendency Survey measures the level of optimism that executives have about current and expected developments regarding production, sales, demand and employment. It also assesses expectations concerning changes in the development of the USDILS exchange rate and inflation. The survey is based on a sample of business executives from five economic sectors: manufacturing, construction, retail trade, hotels and services. The Business Confidence is measured on a scale of -100 to 100, where levels above 0 indicate optimism, 0 neutrality and below 0 pessimism.

Israel Business Confidence
Source: Central Bureau of Statistics, Israel
Israel Consumer Confidence

Consumer Confidence in Israel increased to -23.60 points in September from -24 points in August of 2020.

In Israel, the Consumer Confidence indicator measures the expectations that consumers have about changes in their household financial situation; the country´s general economic situation; unemployment levels and their household saving plans over the next 12 months. The indicator is an arithmetic mean, with equal weights, calculated from the combination of responses to 4 questions based on a sample of around 759 people, aged 21 and over. Consumer confidence is measured on a scale of -100 to 100, where -100 indicates an extreme lack of confidence, 0 neutrality and 100 extreme confidence.

Israel Consumer Confidence
Source: Central Bureau of Statistics, Israel
Israel Bank Lending Rate

Bank Lending Rate in Israel decreased to 3.26 percent in July from 3.28 percent in June of 2020.

In Israel, the prime lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies.

Israel Bank Prime Rate
Source: Bank of Israel
Israel Corruption Rank

Israel is the 35 least corrupt nation out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s rank indicates its position relative to the other countries and territories in the index.

Israel Corruption Rank
Source: Transparency International
Israel Credit Rating

Standard & Poor’s credit rating for Israel stands at AA- with stable outlook. Moody’s credit rating for Israel was last set at A1 with stable outlook. Fitch’s credit rating for Israel was last reported at A+ with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Israel thus having a big impact on the country’s borrowing costs. This page includes the government debt credit rating for Israel as reported by major credit rating agencies.

Ramat Gan, the Financial District
Ramat Gan, the Financial District

Taxation in Israel

Taxation in Israel include income tax, capital gains tax, value-added tax and land appreciation tax. The primary law on income taxes in Israel is codified in the Income Tax Ordinance. There are also special tax incentives for new immigrants to encourage aliyah.

Corporate tax Personal income tax VAT or sales tax Social Security Rate for Companies Social Security Rate for Employees
23% 11,5-50% 17% (standard rate)
0% (fruits, vegetables and public transport)
7,6% 12%

How to Start a Business in Israel

text here

Leave a reply

Your email address will not be published. Required fields are marked *