Source: https://rivet.global/blog/israel-corporate-tax-rate-and-preferred-technology-enterprise
Published: 2026-07-08 · Updated: 2026-07-08 · By Alexia M.

# Israel corporate tax rate and the Preferred Technology Enterprise regime

Israel's 23% corporate tax rate, the 12% and 7.5% Preferred Technology Enterprise rates, who qualifies, and what that means for a startup billing in dollars.

## Key takeaways

- Israel's standard corporate tax rate is 23% and has been since 2018.
- Under the Law for the Encouragement of Capital Investments, a Preferred Technology Enterprise pays 12% on preferred technology income, or 7.5% in Development Area A.
- A Special PTE, part of a group with consolidated revenue above NIS 10 billion, pays 6%.
- PTE status depends on R&D spending and other conditions; check them with an adviser before you rely on the rate.

"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

1. Agree with your adviser which revenue is preferred income and record it separately.
2. Keep dollar receipts matched to invoices, with dates and rates.
3. 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](/blog/israel-startups-dollar-revenue-shekel-payroll).

## Questions

### 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.