Israel Preferred Technological Enterprise 2026

Program Overview

The Preferred Technological Enterprise (PTE) regime offers reduced corporate tax rates to qualifying technology companies in Israel. This is Israel's flagship tax incentive for encouraging high-tech innovation and development.

Tax Rates

Central Israel (Tel Aviv, Jerusalem): 12% corporate tax rate

Development Areas (Negev, Galilee, periphery): 7.5% corporate tax rate

Standard Israeli corporate tax: 23% (for comparison)

Tax savings: 48-67% reduction compared to standard rate

Eligibility Requirements

Israeli company with qualifying technological activity

Minimum 20% of revenues from intellectual property created in Israel

Significant R&D expenditure relative to revenues

Employment of qualified R&D personnel in Israel

Maintain proper transfer pricing documentation

Meet IIA's definition of 'technological innovation'

Qualifying Income

Software development and licensing

Biotechnology and pharmaceutical development

Medical devices and digital health

Advanced materials and cleantech

AI, machine learning, and cybersecurity

Semiconductor design and advanced manufacturing

Application Process

1. Submit application to Israel Innovation Authority
2. Provide detailed description of technological activities
3. Document R&D expenditure and IP development
4. Obtain IIA approval certificate
5. File tax returns claiming PTE status
6. Maintain compliance with annual reporting requirements

Strategic Advantages

Major reduction in effective tax burden

Stackable with IIA grants and other incentives

Attractive to foreign investors due to tax efficiency

No time limit - benefits continue as long as criteria met

Combines with Israel's network of tax treaties

Enhances competitiveness for global talent recruitment

Contact Information

Israel Innovation Authority Website: innovationisrael.org.il Israel Tax Authority: https://www.gov.il/en/departments/israel_tax_authority Consult with Israeli tax advisor for specific guidance