How to Open a Business in Israel
Entrepreneurs who open a business in Israel must contend with the bureaucracy of many different ministries and local offices. In addition to the income tax authorities, business people need to deal with the National Insurance Institute, the Value Added Tax authorities and local municipal and safety authorities. The Israeli government has developed a number of resources to encourage economic initiatives, and to assist people who want to open a business.
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Instructions
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Open a file with the Israeli Income Tax (Mas Hachnasa) office. Provide information to the Tax Authority about the business, which will allow the Tax Authority to estimate what percentage of the business's revenues it will deduct against the business's year-end income tax obligation. The Tax Authority deducts taxes at the source for any business that employs workers.
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File paperwork with the Value Added Tax (Mas Erech Musaf) office. Israeli businesses must collect Value Added Tax (VAT) on all goods and services (except export-related goods and services). Together with the Income Tax reports, the business must submit monthly VAT reports. Pay the previous month's VAT on the 15th of each month.
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Create a file with the National Insurance Institute (Bituach Le'umi) office. Businesses must make monthly payments to the NII for all workers who work for the business. The worker's file from the Income Tax Authority will coordinate with the NII office to help the business make its NII payments for each worker.
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Obtain necessary licenses to operate a business from the relevant business ministries. Tour guides in Israel must hold licenses from the Ministry of Tourism. Professional construction workers, such as electricians, plumbers and contractors must hold licenses from the Ministry of Labor. A tutoring business that advertises certified teachers must ensure the teachers on staff have proper teaching credentials from the Ministry of Education. A business that serves food must have a license from the Israeli Ministry of Health.
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Register the location of the business with the local municipality, which you can find using the science.co.il/Municipal/Cities.asp link, for payment of water usage and city taxes. Comply with fire department inspections and stipulations. Fire departments in Israel have the authority to make yearly inspections of businesses and, if their recommendations go unheeded, to close the facility.
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Develop contacts that can assist in opening a business in Israel. The Israel Chamber of Commerce (chamber.org.il) provides information and assistance to exporters and importers, wholesale and retail business and service businesses and manufacturers. The Israel Association of Electronics and Software Industries (iaesi.org.il/eng/) helps businesses involved in the electronics and software industries. The New Israel Fund (nif.org/issue-areas/grantees/center-for-jewish-arab.html) provides advice, planning assistance, grants and training to encourage economic development through entrepreneurship throughout Israel.
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Tips & Warnings
Businesses can deduct the VAT that they pay out from business-related expenses from the VAT that they owe each month.
Israeli businesses must file monthly reports of their income on the 15th of each month and pay that month's payments on that day. At the end of the year, the business settles up with the Income Tax Authority, either owing the Tax Authority more money or receiving a rebate for overpayment. Employers who employ workers must open a "worker's file" for each employee.
If the business chooses to advertise that it serves kosher food, a kashruth certification from the Rabbinical Council of the area is required. Caregivers must hold certification in their field of caregiving from the Ministry of Social Affairs.
References
Resources
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