Accounting & Tax Compliance in Israel

How accounting and tax compliance work in Israel

Israel applies a standard 23% corporate income tax rate, but the more consequential feature for technology and R&D-intensive businesses is the tiered "Preferred Enterprise" and "Preferred Technological Enterprise" regime under the Law for the Encouragement of Capital Investments: qualifying companies can pay 16% (7.5% in development zones) as a Preferred Enterprise, 12% (7.5% in development zones) as a Preferred Technological Enterprise, or as low as 6% for technology groups with consolidated global revenue above ILS 10 billion.

Israel's headline draw for technology and R&D-driven businesses — a corporate tax rate that can fall as low as 6% — is gated behind IP-sourcing and revenue-mix tests that must be substantiated continuously, not claimed once at setup.

Rate structure and what it applies to

23% standard · 16%/12% Preferred & Preferred Technological Enterprise tiers (7.5% in development zones) · 6% for tech groups with consolidated revenue above ILS 10 billion

• Four-tier corporate tax structure — — from 23% standard down to 6% for large technology groups, each tier gated by distinct IP-sourcing and revenue thresholds that must be evidenced annually
• Technology Evaluator review — — an Innovation Authority-appointed evaluator vets the R&D expenditure claims underlying Preferred Technological Enterprise status; a disallowed claim retroactively raises the applicable rate
• 2026 QDMTT floor — the new Qualified Domestic Minimum Top-up Tax sets a 15% effective floor for entities inside MNE groups with global revenue above €750 million, capping the benefit of the lowest preferential tiers for large groups
• Two-bracket social security ceiling — — combined Bituach Leumi and health employer contributions jump from ~6.70% to ~12.60% once monthly salary crosses ILS 6,331, then stop entirely above the ILS 51,910 ceiling

Rates that apply in Israel

Israeli GAAP, aligned with IFRS (mandatory IFRS for entities reporting under the Israeli Securities Law), and when an audit is required

Statutory bookkeeping in Israel follows Israeli GAAP, aligned with IFRS (mandatory IFRS for entities reporting under the Israeli Securities Law). Annual financial statements audited by a certified Israeli CPA are required for all private and public companies filed with the Registrar of Companies and the Tax Authority — no small-company exemption threshold.

Annual accounts and registration

Annual corporate tax return due within 5 months of fiscal year-end (31 May for calendar-year companies); the 2025 return deadline was extended to 30 July 2026.

Entity registration runs through the Registrar of Companies (Ministry of Justice), typically taking 10–20 business days under the standard track for a complete filing; 3 business days under the expedited track.

Frequently asked questions