Israel Introduces Tax Incentives to Attract Tech Investors

Israel’s government, represented by Finance Minister Bezalel Smotrich, unveiled a tax‑reform package on 3 November 2025 in Tel Aviv. The measures aim to lure investors and technology talent after the Gaza war has ended.

The reform lowers the corporate tax rate on carried interest to 27 percent, exempts VAT on interest brought into Israeli funds, and removes capital‑gain tax for venture‑capital and hedge‑fund investments in high‑tech sectors. It also grants tax exemption on foreign‑source income for Israeli tech workers who return from abroad.

The initiative is intended to boost Israel’s competitiveness as an innovation hub, broaden investment beyond cyber‑security and enterprise software, and stimulate high‑tech job creation. Authorities will monitor its effect on foreign capital inflows and startup formation.