Israel corporate tax rate and the Preferred Technology Enterprise regime
Israeli companies pay corporate tax at 23%. Technology companies that meet the Preferred Technology Enterprise conditions can pay 12% on preferred income, or 7.5% in Development Area A.
- Published
- Reading time
- 1 min read
"Israel corporate tax rate" is the first suggestion after "Israel corporate tax", followed by the 2025 and 2026 versions. The headline is simple. The rate most Israeli tech companies actually pay depends on an incentive regime.
The rates
| Income | Rate |
|---|---|
| Ordinary company income | 23% |
| Preferred technology income of a PTE | 12% |
| PTE in Development Area A | 7.5% |
| Special PTE (group revenue above NIS 10 billion) | 6% |
Who qualifies as a PTE
The Law for the Encouragement of Capital Investments sets conditions that include R&D spending as a share of revenue and either R&D staff, venture investment or growth targets. The reduced rate applies to preferred technology income, broadly income from intellectual property the company developed, not to all income. An adviser should map which revenue lines qualify.
Why it matters for cash planning
A startup selling software to US customers earns dollars and pays most salaries in shekels. Its tax bill is calculated in shekels on income converted at official rates. If the shekel strengthens between invoice and payment, the company's shekel income falls, but its costs do not. The tax rate is one variable; the currency is the other.
Practical steps
- Agree with your adviser which revenue is preferred income and record it separately.
- Keep dollar receipts matched to invoices, with dates and rates.
- Hold dollars for dollar costs and convert shekel needs in planned amounts.
Where Rivet fits
Rivet gives registered companies USD details on the free Starter plan and EUR and GBP details on Growth, with conversion shown before you confirm and every receipt on one ledger for your accountant. Check our eligibility list for Israeli companies. Rivet is not a bank; regulated partner institutions hold the funds. See Israel startups with dollar revenue and shekel payroll.
Questions people ask
What is Israel's corporate tax rate in 2026?
23% for ordinary company income. Lower rates apply to qualifying technology and industrial enterprises under the incentive law.
What is a Preferred Technology Enterprise?
A company meeting conditions on R&D spending, R&D staff or growth, set by the Law for the Encouragement of Capital Investments, which can pay reduced rates on preferred technology income.
Does the PTE regime affect dividends?
Dividends from preferred income carry their own withholding rates, which treaties can reduce for foreign parents. Ask an adviser for your structure.
What is Israel's VAT rate?
18% from 1 January 2025. Many exported services are zero rated.
Sources
Alexia compares the accounts, cards and payment tools companies weigh before they switch, and writes Rivet's market guides for founders in a specific country. Prices in Alexia's comparisons come from each provider's own pricing page on the date given in the article, rules come from the regulator or tax authority that sets them, and every source is listed at the end.
More from Alexia M. →This article is general information, not legal, tax or financial advice. Rules and fees change; check the sources above and the provider’s current terms before you act on them.
- israel corporate tax rate
- israel company tax
- preferred technology enterprise
- israel tax authority
- startups
