49 Recently, a memorandum to amend the Income Tax Ordinance (the “Memorandum” and the “ITO“) was published as part of a series of amendments expected to be enacted in the Israeli state budget for 2025. The published Memorandum addresses, among other things, the provision of relief for foreign residents’ investments in Israeli companies and the activities of investment funds with foreign investors operating in Israel. The background for this proposed amendment is based on the recognition of the significant contribution of the high-tech sector to the Israeli economy, alongside growing criticism from the business sector regarding the low level of tax certainty in Israel, which deters many foreign companies and investors. Therefore, the Memorandum aims to strengthen Israel’s business environment by establishing an attractive, certain, and stable tax regime, with an emphasis on foreign residents’ investments and investment funds operating in Israel. Below are the main proposed amendments. Exemptions and Reliefs for Foreign Investors in Securities of Israeli Companies (including through Investment Funds) In general, a foreign resident is exempt from capital gains tax in Israel on investments in Israeli companies, unless the investment is considered part of Daniel Paserman Head of Tax Gornitzky Proposed Tax Relief for Foreign Investors & Investment Funds in Israeli Companies
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