Israel To Create Financial R and D Centres

Israeli Finance Ministry Director General, Haim Shani, has visited New York in a bid to encourage international banks to set up research and development centres in Israel by offering attractive incentives.

Israel already hosts R&D centers for an impressive list of high-tech US companies including Intel, IBM, Motorola, Cisco and Hewlett-Packard.

“Israel has the expertise in technology and understands the business of financial services, but there is a mismatch between talent and the demands of the local economy,” Shani told JTA. “Israel, through its human capital, could be a center for innovation. The financial services sector has the potential to be a major employer.”

Israel has set aside a budget of USD10-15m for tax breaks and labour subsidies. Companies locating in more remote areas would receive the best benefits. Israel could subsidize up to 50% of wages at the banks’ R&D units for up to five years, Shani told Bloomberg.

In a recent evaluation of the cost of global R&D initiatives after tax and other cost incentives, undertaken by accountants Mazars, Israel was found to be the most attractive. Of the eight countries with attractive R&D tax regimes examined – Australia, Canada, France, Ireland, Israel, Netherlands, UK and the USA, Israel had the most competitive effective tax rate at -6%.