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The Israeli Advantage « Israel is, by many measures, the country (relative to its population) that has done the most to contribute to the tecnology revolution» Bill Gates
The Israeli Advantage
« I s r a e l i s , b y m a n y m e a s u r e s , t h e c o u n t r y ( r e l a t i v e t o i t s p o p u l a t i o n ) t h a t h a s d o n e t h e m o s t t o c o n t r i b u t e t o t h e t e c n o l o g y r e v o l u t i o n » B i l l G a t e s
Main Economic Indicators
Inflation (%)
Unemployment (%)
Imports ($ billion)
Exports ($ billion)
GDP ($ billions)
GDP/Cap ($)
2012
1,7
6,8
92,5
91,0
241,0
30,48
2008
4,6
6,1
84,1
80,4
191,8
28,47
2009
3,3
7,5
72,3
70,35
193,1
28,160
2010
2,7
8,3
81,1
86,6
202,0
29,53
2011
3,5
7,1
87,5
84,1
211,7
30,38
*January 2013
Advanced Economy
The Israeli economy is a diverse open market economy. Being a relatively young state Israel is recognized as a developed market by many major indices. Israel also became a member of the OECD in 2010.
As of 2011 Israel has the largest number of companies listed on NASDAQ after the United States and China, and more than 60 Israeli companies are traded on various European Exchange Stock Markets.
Hi-Tech Economy: the Silicon Wadi
Israel is home to many international hich-tech companies:
which understand its cultural and economic benefits, as well as its innovative spirit. Along with local Israeli firms whiche became an international success and local firms make Israel worthy of its portrayal as the «Silicon Wadi».
Source: Bank of Israel
Innovative Economy: the Start-Up Nation
Israel is known for its unique
entrepreneurial and innovative spirit.
Israel excels is:
1.Total expenditure on R&D of GDP
2.5° strenght in investor protection
3.1° in the world in quality of scientific research
4.Entrepreneurship
5.2° in the world in Venture Capital Availablity
6.4° in the world in Utility Patents per citizen
Foreign Companies Invested in Israel- Some Examples
US
• Microsoft
• Pratt & Whitney
• AOL Time Warner
• Intel
• IBM
• Boeing Enterprises
• Cisco Systems
• GE
• Lucent
• 3Com
• Hewlett Packard
• Merrill Lynch
• Motorola
• Sun Microsystems
Europe Asia
• Samsung Electronics
• Daewoo
• Nomura
• Hutchison Telecomm.
• LG Group
• Sony
• Toyo Ink
• Hyundai
• Acer Computers
• Sumitomo Trading
• Fuji
• Honda
• British Telecom
• Sap
• Philips
• Alcatel
• Siemens
• DaimlerChrysler
• Volvo
• Cable & Wireless
• Deutsche Telekom
• Telecom Italia
• Generali
• L’Oreal
• Danone
• Unilever
• Villmorim
• Veolia
Investment climate in Israel
Foreign Companies Invested in Israel - Some Examples
Name Total Fund
3Path, Airslide, Appstream, Cash-U, Coresma, CyOptics, Demantra, OnSet,
PassCall, Phone-Or, RealTimeImage, BlueSoft, ExaNet, Gilian, Identify,
InfoCyclone, Jungo, Riverhead, TeraCross, Unicorn, Aduva, Callixa,
CardoNet, Nanolayers, Passave, Atrica, IXI Mobile, Montilio, Wisair
35
Intel Capital
Atomica, Cash-U, ClearForest, CTI2, Cyber-Ark, E4X, Gizmoz, Interwise,
Mercado, Narus, NewChannel, Trellis Photonics, Cadent, Gilian, Silverback,
Virtio
16
JP Morgan Partners (JPMP)
3Path, Appstream, Atomica, Ezchip, Lenslet, Lynx, Sanctum, SmartLight,
SpearHead, Tundo, Whale, XOSoft, CeLight 15
Goldman
Sachs
3DV, Demantra, ESI, ImageID, MCM, Neteos, Neurovision, RadioTel, CMT,
X-Technologies 12
Shamrock
Holdings
Appstream, Enigma, RichFX, ClearForest, ComSense, Gilian, Hotbar,
PowerDsine 10
Deutsche Bank Alex Brown
Atrica, ForeScout, Lycium, TeraChip, Discretix, Flexlight, ItemField, Pontis 9 Accel Partners
Mobile Economy, Saifun, Shopping.com, KaVaDo, LocatioNet, Unicorn,
Mellanox, Sphera, Power Paper 9
Banc of
America Equity Partners
(BAEP)
Atomica, Earthnoise, Exent, Expand Networks, Gizmoz, Shopping.com,
Niragongo, Valis, BigBand 9
AOL Time Warner Ventures
USA
Name Total Fund
Allot, Enigma, Millimetrix, Modem Art, Net2gether, Power Paper, Tantian,
Cloverleaf, Virtio 9
BancBoston Ventures
Allot, BridgeWave, Expand Networks, Informative, MobileAccess,
Teleknowledge, Whale, PowerDsine, Banter 9
RBC Dain Rauscher
ClearForest, Lynx, Mercado, RADLAN, TdSoft, MobileAccess 8
HarbourVest
Personeta, Monosphere, ScaleMP, Skybox, Softier 8 Lightspeed
LaserComm, RichFX, Saifun, D-Pharm, Lynx, NextNine 8
Morgan Stanley Private
Equity
Ezchip, Lenslet, Sheer, SpearHead, Tundo, XOSoft, Atrica, Appstream 8 JK&B Capital
Airslide, CyOptics, Millimetrix, OrAccess, StoreAge, Riverhead 8 Cisco Systems Inc.
Cash-U, Siliquent, Decru, HyperRoll, ClearForest 7
Greylock Management
Corp.
Investment climate in Israel
Foreign Companies Invested in Israel - Some Examples
USA
Investment climate in Israel
Foreign Companies Invested in Israel - Some Examples
USA Name Total Fund
HarmonyCom, XOSoft, Actelis, IXI Mobile 6 Draper Fisher Jurveston (DFJ)
Lambda, Memlink, Kailight, MagniFire, Mobilitec 6 Lucent Venture Partners Inc.
ATI, Predix, PVT, Flowmedica, SuperDimension 5 Oxford Bioscience Partners (OBF)
uTok, Opticalis, Celerica 5 Ridgewood Capital
Prompt2U, Radwin 5 Global Catalyst Partners (GCP)
Alchemedia, PacketLight, Trellis Photonics, Actelis 5 Carlyle Group
Sanctum, XaCCT, Mellanox 5 Dell Ventures
Airslide, CyOptics, Native Networks, Whale, Bandwiz 5 Soros Private Equity
Name Total Country Fund
Congruency, Creo Israel, Cyota, GlobaLoop, Midbar,
Radwin, TeraChip 9 Japan JAFCO Co. Ltd.
Celvibe, LocatioNet, Wintegra, Atrica, Lambda,
Mellanox, IXI Mobile, Silverback 8 Taiwan
China Development Industrial Bank
(CDIB(
Bug-Life, MessageVine, Sphera, VisionTech, ExaNet 6 Japan CSK Venture Capital Co. Ltd.
Bug-Life, Sanctum, Pegasus, Voltaire 6 Japan Hitachi Corporate Venture Capital Fund
Appstream, Informative, Phone-Or, PrintLife, Celvibe 5 Japan Mitsubishi Corp.
Investment climate in Israel
Foreign Companies Invested in Israel - Some Examples
ASIA
Name Total Country Fund
NetReality, PassCall, TeleMessage, SigValue 6 Holland Holland Venture BV
Airslide, MobileAccess, Teleknowledge, Xpert, KereniX 5 Italy CDB Web Tech
Silentium, OrSense, VisionSense 5 UK Lewis Trust Group (LTG)
Lambda, Surf, Atrica, Envara 5 UK Young Associates Ltd.
EUROPE
Supportive Business Environment
Worldwide taxation and customs treaties “
Protection of trademarks, patents and intellectual
property of all kinds
Comprehensive legal protection of foreign companies
State of the art telecommunications
A highly advanced banking and financial sector
Industry and Trade
From oranges to software
Over the years the Israeli industry has developed
from small establishments that engaged primarily
in processing of agricultural products and
clothing , to an open high-tech industry that uses
modern methods and advanced manufacturing
technologies. Looking at manufacturing exports
by technological intensity in the past 20 years,
one can note that low tech industries did not
vanish, but high tech industries flourished in a
remarkable way.
Israel’s Main Trading Partners
Looking at Israel’s main trading partners by continents (Europe,
America and Asia) in the last 20 years, Europe is the largest
trade area to export to Israel. Also noticable is Israel’s tendency
to open itself to foreign trade in the last two decades, as part of
the government’s liberal economic policy
Imports and Exports with OECD
countries (I) Countries Imp.2013 *(I-VIII) Imp. 2012 Exp. 2013 Exp. 2012
AUSTRIA 220,1 209,7 59 93
AUSTRALIA 65,7 84,4 364,3 410,2
ITALY 1815,5 1875,9 838,7 809,7
ICELAND 2,3 2,4 1,8 4,1
IRELAND 646,0 727,1 1006,0 994,5
USA 5333,0 6252,6 11531,8 12183,6
BELGIUM 2357,5 2390,1 2078,5 1992,2
GERMANY 3123,1 3150,3 1124,0 1123,2
DENMARK 191,4 160,6 62,2 57,6
NETHERLAND 1728,9 1943,5 1307,0 1533,5
HUNGARY 164,2 303,1 112,8 136,8
UNIT. KINGDOM 1639,6 1798,6 2227,2 2053,8
TURKEY 1577,9 1462,9 1510,4 986,2
GREECE 130,4 131,2 $162,0 142,9
JAPAN 756,6 1347,0 450 831,8
LUXEMBOURG 174,8 118,9 13,3 9,8
MEXICO 97,9 98,5 238,6 266,5
NORWAY 77,7 69,0 52,4 52,8
Imports and Exports with OECD
countries (II)
Source: IMD World Competitiveness Yearbook, 2002
Countries Imp.2013 Imp. 2012 Exp. 2013 Exp. 2012
NEW ZEELAND 8,2 5,1 39,1 73,4
SLOVENIA 120 80,8 97,9 95,3
SLOVAKIA 73,1 57,1 12 17,5
SPAIN 922,5 827,3 925,5 695,6
POLAND 148,9 134,9 163,8 155,8
PORTUGAL 76,2 92,1 84,7 94
FINLAND 202,4 184,7 73,3 95,
CHILE 45,9 35,4 164,1 100,9
CZECH REPUBLIC 359,7 337,6 95,8 112,7
FRANCE 1034,3 1131,9 1026,2 928,9
SOUTH KOREA 1030,8 1133,6 405,7 509,1
CANADA 311,5 290,9 434,8 544,5
SWEEDEN 383,9 432,1 110,1 107,7
SWITZERLAND 2755,2 2776,6 977,6 836,6
Imports of Consumer goods, by
commodity groups
Imports of Raw Materials by commodity groups
Imports of Investment goods, by
commodity groups
IMPORTS FROM ITALY (005 IT), TOTAL - 2012
VALUE
(THOUSANDS OF
USA DOLLAR)
01 LIVE ANIMALS 102
03 FISH, CRUSTACEANS AND MOLLUSCA 240
04 DAIRY PRODUCE; EGGS, NATURAL HONEY; EDIBLE PRODUCTS OF ANIMAL ORIGIN 2836
05 PRODUCTS OF ANIMAL ORIGIN N.E.C. 1220
06 LIVE TREES AND OTHER PLANTS, BULBS, ROOTS AND OTHER GARDEN PLANTS 343
07 EDIBLE VEGETABLES, ROOTS AND TUBERS 2731
08 EDIBLE FRUITS AND NUTS; PEEL OF MELONS AND OTHER CITRUS FRUIT 9640
09 COFFEE, TEA, MATE AND SPICES 25988
10 CEREALS 1784
11 PRODUCTS OF THE MILLING INDUSTRY; MALT AND STARCHES; INULIN; WHEAT GLUTEN 6773
12 OIL SEEDS, GRAINS, FRUITS, INDUSTRIAL AND MEDICAL PLANTS, STRAW AND FODDER 572
13 TREE GUM; RESINS, OTHER VEGETABLE SAPS AND EXTRACTS 393
14 VEGETABLE PLAITING MATERIALS; VEGETABLE PRODUCTS N.E.C. 86
15 ANIMAL OR VEGETABLE FATS AND OILS; ANIMAL OR VEGETABLE WAXES 2701
16 PREPARATION OF MEAT, OF FISH, OR OF OTHER AQUATIC INVERTEBRATES 1798
17 SUGAR AND SUGAR CONFECTIONERY 1069
18 COCOA AND COCOA PREPARATIONS 8020
19 PREPARATIONS OF CEREALS, FLOUR STARCH OR MILK; PASTRY PRODUCTS 46344
20 PREPARATIONS OF VEGETABLES, FRUITS, NUTS AND OTHER PLANTS 6599
21 MISCELLANEOUS EDIBLE PREPARATIONS 6847
22 BEVERAGES,SPIRITS FOR DRINK AND VINEGAR 24760
23 RESIDUES AND WASTE FROM THE FOOD INDUSTRIES; PREPARED ANIMAL FODDER 10277
24 TOBACCO AND TOBACCO SUBSTITUTES 655
25 SALT, SULPHUR; EARTHS AND STONE; PLASTERING MATERIALS, LIME AND CEMENT 10098
26 ORES, SLAG AND ASH 17
27
MINERAL FUELS, MINERL OILS AND THEIR PRODUCTS, BITUMINOUS SUBSTANCES AND
MINERAL WAXES 34224
28 INORGANIC CHEMICALS 7516
29 ORGANIC CHEMICALS 132727
30 PHARMACEUTICAL PRODUCTS 42071
31 FERTILIZERS 2643
32 TANNING & DYEING EXTRACTS; DYES INKS AND MASTICS; PUTTY 39666
33 ESSENTIAL OILS AND RESINOIDS; COSMETIC AND TOILET PREPARATIONS 23336
34
SOAP, WASHING, LUBRICATING, POLISHING, SCOURING PREPARATIONS, CANDLES AND DENTAL
PREPARATIONS 26561
35 ALBUMINOIDAL SUBSTANCES; MODIFIED STARCHES; GLUES, ENZYMES 9654
37 PHOTOGRAPHIC OR CINEMATOGRAPHIC GOODS 1460
38 MISCELLANEOUS CHEMICAL PRODUCTS 50760
39 PLASTICS AND ARTICLES THEREOF 144984
40 RUBBER AND ARTICLES THEREOF 25807
41 RAW HIDES AND SKINS (OTHER THAN FURSKINS) AND LEATHER 15154
42 ARTICLES OF LEATHER; TRAVEL GOODS; ARTICLES OF ANIMAL GUT 7424
43 FURSKINS AND ARTIFICIAL FUR AND MANUFACTURES THEREOF 174
44 WOOD AND ARTICLES OF WOOD 30188
45 CORK AND ARTICLES OF CORK 550
46 MANUFACTURE OF STRAW OR OF OTHER PLAITING MATRIALS; WICKERWORK 35
47
PULP OF WOOD OR OTHER FIBROUS CELLULOSIC MATERIAL; WASTE AND SCRAP OF PAPER OR
PAPERBOARD 473
48 PAPER AND PAPERBOARD; ARTICLES OF PAPER PULP, PAPER OR PAPERBOARD 53242
49 PRODUCTS OF THE PRINTING INDUSTRY: BOOKS, NEWSPAPERS, PICTURES, MANUSCRIPTS 1930
50 SILK AND WASTE SILK 176
51 WOOL, FINE OR COARSE ANIMAL HAIR; HORSEHAIR YARN AND WOVEN FABRIC 597
52 COTTON 2226
53 OTHER VEGETABLE TEXTILE FIBRES 347
54 MAN-MADE FILAMENTS 4964
55 MAN-MADE STAPLE FIBRES 11216
56 WADDING, FELT AND NONWOVENS; SPECIAL YARNS; TWINE, CORDAGE, ROPES AND CABLES 3590
57 CARPETS AND OTHER FLOOR COVERINGS 1311
58 SPECIAL WOVEN FABRICS; LACE; TAPESTRIES, TRIMMINGS; EMBROIDERY 1046
59 IMPREGNATED, COATED, COVERED TEXTILE FABRICS; TEXTILE ARTICLES FOR INDUSTRIAL USE 18909
60 KNITTED OR CROCHETED FABRICS 3209
61 ARTICLES OF APPAREL, AND CLOTHING ACCESSORIES KNITTED OR CROCHETED 28821
62 ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, NOT KNITTED OR CROCHETED 37356
63 OTHER MADE-UP TEXTILE ARTICLES; WORN TEXTILE ARTICLES; RAGS 2583
64 FOOTWEAR, GAITER AND THE LIKE; PARTS OF SUCH ARTICLES 34492
65 HEADGEAR AND PARTS THEREOF 2838
66 UMBRELAS, STICKS AND PARTS THEREOF 92
67 FEATHERS, DOWN AND THEIR PRODUCTS; ARTIFICIAL FLOWERS; HUMAN HAIR ARTICLES 251
68 ARTICLES OF STONE, PLASTER, CEMENT, ASBESTOS, MICA ETC. 42679
69 CERAMIC PRODUCTS 62078
70 GLASS AND GLASSWARE 15810
71 PEARLS, PRECIOUS STONES, PRECIOUS METALS IMITATION JEWELLERY AND COINS 107169
72 IRON AND STEEL 87887
73 ARTICLES OF IRON OR STEEL 77771
74 COPPER AND ARTICLES THEREOF 13103
75 NICKEL AND ARTICLES THEREOF 1930
76 ALUMINIUM AND ARTICLES THEREOF 28536
78 LEAD AND ARTICLES THEREOF 19
79 ZINC AND ARTICLES THEREOF 55
80 TIN AND ARTICLES THEREOF 429
81 OTHER BASE METALS; CERMETS; ARTICLES THEREOF 2886
82 TOOLS, IMPLEMENTS, CUTLERY, SPOONS & FORKS OF BASE METAL; PARTS THEREOF 14039
83 MISCELLANEOUS ARTICLES OF BASE METAL 31001
84 MACHINERY AND MECHANICAL APPLIANCES AND COMPUTER EQUIPMENT 529588
85 ELECTRICAL MACHINERY AND EQUIPMENT, SOUND AND TV RECORDERS AND REPRUDUCERS;
PARTS. 282641
86 RAILWAY LOCOMOTIVES, ROLLING-STOCK AND PARTS THEREOF 7762
87 VEHICLES AND THEIR PARTS 173571
88 AIRCRAFT AND PARTS THEREOF 59220
89 SHIPS, BOATS AND FLOATING STRUCTURES 184
90 OPTICAL, PHOTOGRAPHIC, MEASURING AND MEDICAL INSTRUMENTS 112447
91 CLOCKS, WATCHES AND PARTS THEREOF 2366
92 MUSICAL INSTRUMENTS 376
94 FURNITURE; BEDDING; LAMPS; MEDICAL FURNITURE; PREFABRICATED BUILDINGS 116063
95 TOYS, GAMES AND SPORTS REQUISITES; PARTS AND ACCESSORIES THEREOF 11153
96 MISCELLANEOUS MANUFACTURED ARTICLES 9909
97 WORKS OF ART, COLLECTORS PIECES AND ANTIQUES 822
99 COMMODITIES, N.E.C. 11674
Italy (005) (ISO: IT) - Total 2779664
WEF –Competitiveness Report
SWEDEN FINLAND U.S.A. ISRAEL Technological readiness
HONG KONG ICELAND NORWAY ISRAEL Availability of mobile or cellular
telephones
HONG KONG ICELAND DENMARK ISRAEL Business costs of irregular payments
(all countries hare the same rank #1)
HONG KONG UK ISRAEL U.S.A. Venture capital availability
FINLAND ISRAEL SWEDEN U.S.A. Quality of scientific research
institutions
JAPAN ISRAEL FINLAND INDIA Availability of scientists and engineers
ISRAEL TAIWAN JAPAN U.S.A. Utility patents
Country Rank 1st 4th 2nd 3rd
National Priority Zone A
National Priority Zone B
Central Israel
Tax relief program: “Cost +”
Three priority areas: A, B, C
Area C Center of Israel
Area B preferred regions
of Israel
Area A most preferred
regions of Israel
2 years - tax exemption
6 years - tax exemption
10 years - tax exemption
8 years – only 10% taxes
4 years – only 10% taxes
Tax Exemption Path
Tax Program Priority Zone A Priority Zone B Priority Zone C
Tax Exemption 10 Years 6 Years 2 Years
Reduced Company Tax
Israeli Investors Not Applicable 1 Year 5 Years
Foreign Inventors Not Applicable 4 Years 8 Years
Tax Benefits Table ( in %)
Tax Benefit Example
Not an
Approved
Enterprise
Approved Enterprise
Percent of Enterprise owned by Foreign Investors
0-49% 49-74% 74-90% 90-100%
Taxable Income 100 100 100 100 100
Company Tax 35 25 20 15 10%
Balance 64 75 80 85 90
Dividend Tax Percentage 25 25 20 15 10
Dividend Tax 16.5 11.25 12 12.75 13.5
Total Tax on Distributed
income 50.5 36.25 32 27.75 23.5
VAT (Value Added Tax) in Israel
The rate of VAT is Israel is uniform and at present is fixed at 17%.
There are a number of instances in which VAT is not charged. Among them are:
1.Export
2.Hotel Accomodation and various services to tourists
3.Air freight ore sea freight to and from Israel
4.Sale of unprocessed food and vegetables
5.Renting premises for residential purposes
6.The sale of an asset from which it was not possible to deduct the VAT at the tir it was purchased.
Israeli Tax Reduction
Investments in Funding for Scientific Research
If you have invested in scientific research, even if the investment is not within the normal limits of your business, and on condition that the research is in the field of industry, agriculture, transport or energy and has been approved by the Chief Scientist, your investment will be fully deductible, on condition that the deduction is not more than 40% of your taxable income.
Investments in Searching for Oil
If you invest in stock of oil companies, you are entitled to deduct the total sum of your investment. The remaining sum should not exceed the amount of your original investment.
Investment in an Israeli Film
If you invest in an Israeli film, subject to the film being approved by the Committee that was appointed for that purpose, you are entitled to a deduction on this investment up to 50% of your taxable income.
About 60 foreign R&D centers are located in Israel
AND MORE…
EFFICIENT ECOSYSTEM
Strong connection
between government, private sector and academia
Informal yet an
efficient society
Dynamic culture
Government Support:
The Law for the Encouragement of Capital
Investments
Competitive grant program
Tax exemption path for manufacturing
facilities
The law for encouragement of Industrial R&D
Tax exemption for venture capital investment
Promoting R&D centers in the Periphery
(Nagev and Galilee)
Special Program –R&D program for financial
sector
The Global Enterprise R&D Cooperation
Framework
Israel New Tech: supporting Israel’s
Cleantech industry
Thank you! This document was made by:
Elena Moretti
Dalla Libera & Partners
AN INDEPENDENT MEMBER OF GENEVA GROUP INTERNATIONAL – WWW.GGI.COM
Piazza Gaetano Salvemini, 7 - 35131 Padova - Tel. +39 049 8754424 - Fax +39 049
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