Invest in the

STATE OF ISRAELMinistry of Industry, Trade and LaborMinister of Development of the Negev and GalileeNegev & GalileeInvest in theNegev and Galilee DevelopmentStrategic Plan

Director Welcome SpeechTechnological Science ParkNational Institute of BiotechnologyIndustrial Incubators ProgramTechnological Center for Renewable EnergyNational Technological Center for WaterNo'am Industrial ParkChange-Generating EnterprisesDevelopment and Upgrading of InfrastructuresProjects Focusing on the Bedouin PopulationEncouragement and Support of Small BusinessesVocational TrainingGeneral information for to the InvestorAid to ExportersTechnological and Industrial Research and DevelopmentAssisting Small and Medium EnterprisesLand Allocation and Subsidizing Development ExpensesEstablishing an EnterprisePlacement of New Employees3468101214161820222427283137404246Invest in theNegev & GalileeNegev and Galilee DevelopmentStrategic Plan

2 < Invest in the Negev and GalileeNegev & GalileeInvest in theNegev and Galilee DevelopmentStrategic Plan

Dear readers,The Israeli government has launched a national strategic program for developing the Negev and a program for promoting and developingindustries and employment in peripheral regions, particularly in Galilee. The objective of these programs is to create developmentalstrongholds which could later influence and transform economical development throughout the Negev and Galilee. In order to further theachievement of these economical and occupational developmental objectives, the Ministry of Industry, Trade and Labor has establisheda designated unit - The Negev and Galilee Development Center.The Center is responsible for integrating, managing and coordinating the designated treatment for economic development, for financialinvestments and employment in the Negev and Galilee regions, with the aim of increasing growth and employment in these regions.The Center was established under the authority of the Ministry of Industry, Trade and Labor CEO and is operating cooperatively with allprofessional units within the ministry, as well as with various governmental agencies. At the same time, the Center›s primary objective isto initiate new programs and projects that will lure investors, to develop new sources of employment and to encourage the founding oflarge and small business within the Negev and Galilee regions.This manual contains several selected projects in various fields, which are directed cooperatively by several ministerial units, includingthe Ministry for the Development of the Negev-Galilee as well as other organizations operating throughout the Negev and Galilee areas.You are welcome to visit the Center›s website at www.moital.gov.il/NegevGalilee and keep abreast of the latest ongoing initiatives andprojects, and to contact us with any request or ideas for cooperation.Sincerely,Avi Feldman DirectorThe Negev and Galilee Development Center3 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

Science andThe Beersheba Science and Technology ParkTechnology Park

The Beersheba Advanced Technology ParkDescription of the ProjectThe Project is intended for the advancement of the Negev in general andBeersheba as a technology and industrial metropolis in particular. TheProject's aim is the creation of quality employment for graduates of theinstitutes of higher education and creation of an advanced industrial andtechnological infrastructure which will be able to benefit from the researchand educational infrastructure of the nearby Ben-Gurion University. ThePark is located in the vicinity of the new Beersheba railway station. Hitechcompanies in Israel and abroad that are engaged in science-basedindustry research and development will be concentrated in the Park. Itis intended that the science park will help speed up the processes ofeconomic and urban development of the Beersheba metropolitan area.Government investment in the Park amounts to approximately NIS 51Million. Construction of the Park is due to be carried out by an InternationalDevelopment Company and the first building is expected to be ready in2010.The Project is in collaboration with the Regional DevelopmentAdministration of the Ministry of Industry, Trade and Labor.Target Group:Technology Companies seeking a future location.5 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

TheNegev NationalThe Negev National Bio-Technology InstituteBio-TechnologyInstitute

The Negev National Bio-Technology InstituteDescription of the ProjectThe State of Israel is making substantial investments in the field of basicacademic research civil-industrial development and at an unprecedentedrate in comparison to other countries 1 . The National Bio-TechnologyInstitute provides an example of the connection between academia andindustry, where the results of applicative reserch are quickly passed toindustry and integrate into production. The Institute places emphasison development of innovative technological applications in collaborationwith academia and other research institutes in Israel and world-wide. TheInstitute is located in Beersheba and more than 75% of the researchersand employees in the Institute are Negev residents.The Project is being undertaken by the Office of the Chief Scientists' inthe Ministry of Industry, Trade and Labor in conjunction with the Ministryfor Development of the Negev and Galilee, Ben Gurion University of theNegev and a foreign donor. Approximately NIS 380 Million will be investedin the next few years in establishment of the Institute.Target Group:Industrial Enterprises in the Bio-Technology Sector, researchers anddevelopers.1Israel is investing 4.7% of GDP/per capita in Research and Development,the highest ratio in the world (IMD World Copetitiveness Year Book 2009)7 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

IndustrialIndustrial Incubator ProgramIncubator

Industrial Incubator ProgramDescription of the ProjectThe Industrial Incubator in the Negev is working for the establishment ofa manufacturing base for technology/engineering-based companies whohave passed the stage proving technological feasibility and are intendingto set-up an industrial manufacturing operation (including the software andprocessing sector). The Incubator Project activity will have an emphasison transition to industrial manufacturing and will subsequently include thecarrying out of research and development or engineering activity to perfectthe product. This includes "Beta-Site", industrialization, manufacturingpreparation, preparation of manufacturing portfolios, commencement ofproduction in small series, preparation for marketing, commercializationof the products, products design, training of personnel, establishmentof operating infrastructures, participation in exhibitions and professionalconferences and obtaining consulting services in a range of spheresconnected with company building and industrialization. The period overwhich the work of setting up the incubator project is intended to be isbetween two to three years according to the plan that is to be approvedfor the whole Project. In 2010 another industrial incubator is scheduled forthe Galilee Region.The Project is proceeding in collaboration with the Office of the ChiefScientists' in the Ministry of Industry, Trade and Labor through theIncubators Administration.Target Group:Investors and Entrepreneurs.9 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

Renewable Energy Technology CenterTechnologyEnergyCenter

Renewable Energy Technology CenterDescription of the ProjectThe Renewable Energy Technology Center in the Negev will proceedwith the promotion of research and development projects in this field incollaboration with university other research institutions, research institutesand industry. The Center will oversee the project from the initial stagesof the research and development in the university until the technologicalfeasibility stage and will also offer research and development servicesto industrial manufacturing companies in the field of renewable energyincluding training activity and activation of areas for experiments.The Ministry of Industry, Trade and Labor will be investing substantialresources in existing programs for the development of new products inthe sector, the sponsoring of companies in the training of specially skilledmanpower and encouragement of the export of Israeli technology overseasvia a system of commercial attaches of the Foreign Trade Administration inthe Ministry of Industry, Trade and Labor.The Project is being undertaken in collaboration with the Ministry ofInfrastructures, The Finance Ministry and the Ministry for Development ofthe Negev and Galilee and is being implemented by the Office of the ChiefScientists' at the Ministry of Industry, Trade and Labor.Target Group:Researchers, academics, entrepreneurs and technology companies in therenewable energy sector.11 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

National WaterThe Sde Boker National Water Technology CenterTechnologyCenter

The Sde Boker National Water Technology CenterDescription of the ProjectThe Sde Boker technology center is program for the development of watertechnologies in Israel. The object of the center is to extend aid to the watersector, as a transition from the research and development stage to themanufacturing and marketing stage and to lay the foundation for the statusof Israeli industry as a principle factor in the worldwide water technologymarket. As part of the more extensive program, a number of steps willbe taken to encourage academic research and industrial research anddevelopment, including the establishment of a national water technologycenter at Sde Boker. The center will combine business initiatives withacademic research and will strengthen the link between academia andindustry. The Center will operate on a pro-active basis to find researchersand research with potential in the water sector, for the promotion ofresearch and development of projects the purpose of which is to carryout an initial technological feasibility study and for the preparation andactivation of areas for experiments.The Project is being undertaken in conjunction with the Ministry of Finance,the Investment Promotion Center, the Office of the Chief Scientists' at theMinistry of Industry, Trade and Labor and the Ministry for the Developmentof the Negev and Galilee.Target Group:Researchers, academics, entrepreneurs and technology companies in thewater sector.13 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

No'amNo'am Industrial ZoneIndustrial Zone

No'am Industrial ParkDescription of the ProjectThe No'am Industrial Park located near Netivot, Sderot, Rahat and Ofakimhas been designated as a suitable location for increasing the supplyof places of employment in the Western Negev. In view of this, variousbenefits and incentives have been provided that encourage the ownersof existing enterprises or the owners of new enterprises, to relocate andestablish their operations in this industrial park. The various incentivesinclude the contribution by the Ministry of Industry, Trade and Labor tothe expenses of the planning the establishment of the plant, transfer ofthe plant from the central region to the No'am Industrial Park, contributiontowards the cost of transport of the employees, contribution towards thetraining of employees who are residents of the region, a discount on theland development costs and so forth.The Project is being undertaken in conjunction with the ManufacturersAssociation, the No'am Industrial Zone, the Investment Center and theRegional Development Administration of the Ministry of Industry, Trade andLabor.Target Group:Enterprises that are interested in setting up/relocating their operations tothe No'am Industrial Park.15 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

Aid for the EstablishmentChangeofChange-GeneratingEnterprises in thePriority A AreasGeneratingEnterprises

Aid for the Establishment of Change-GeneratingEnterprises in the Priority A AreasIn view of the global economic crisis and its implications on the state ofIsrael and especially priority A areas. the Ministry of Industry, Trade andLabor and the Ministry of Finance have formulated a track for the provisionof aid to encourage the establishment of change - generating enterprisesin the Priority A areas. As the supply and range of places of employmentin the Priority A areas is substantially lower than those in the center of thecountry, employees who have lost their jobs in businesses in the Priority Aareas find it difficult to find alternative employment and some of them areeven lost to the employment market.The purpose of this track is to create a wide range and scope of stableplaces of employment in the Priority A regions through the establishmentof enterprises in this area or the relocation of industrial activity to this area,with a total investment of at least NIS 300 Million and an employmentexpectation of at least 400 employees.Extent of the Aid Being Provided:Up to 25% of the total eligible investment (equipment and machinery, expensesof planning and supervision of buildings; construction; land and infrastructuredevelopment; installations and systems in the building; improvements inleased property; installation of equipment; running-in costs; office equipment;computers and communications; transportation of equipment).Further details can be obtained from the website of the Ministry ofIndustry, Trade and Labor - Investment Center.17 Negev and Galilee Development Center

Industrial ParksDevelopment and Upgrading of Infrastructuresin Industrial Parks in the Priority Areasin the Priority Areas

Development and Upgrading of Infrastructuresin Industrial Parks in the Priority AreasNIS 30 Million will be allocated for investment for development andupgrading of infrastructures in industrial parks in the Negev and Galilee,The programs will assist the Local Authorities in the outlying areas torestore the infrastructure in the industrial parks and encourage theattraction of enterprises to these areas.This Program accomplishes the policy of the Ministry of Industry, Trade andLabor to strengthen the industry in the Negev and Galilee and to attractenterprises to these industrial parks, increase the supply of places ofemployment and encourage economic growth in these areas.An inter-ministerial committee of the Ministry of Industry, Trade andLabor and the Ministry for the Development of the Negev and Galileehas formulated criteria and benchmarks for industrial development andupgrading in the industrial and employment parks. At the end of theprocess the Committee decided that budget funds would be provided for15 industrial parks under this Program in the coming year. The followingis a list of these industrial parks: Alon Tavor, Beersheba (Emek Sara),Dimona, Dalton, Kfar Kana, Migdal Ha-Emek, Mitzpeh Ramon, Sakhnin,Zahar, Zipporit, Safed, Katzrin, Kiryat Shmona, Segev Shalom and Sderot.The Program is being implemented by the Regional DevelopmentAdministration and the Negev and Galilee Development Center inthe Ministry of Industry Trade and Labor.19 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

Projects Focusing on theBedouin Populationin the NegevBedouin-Arab society is undergoing a process ofdifficult social and political changes as a result of thetransition from a traditional lifestyle to a modern lifestyle.This transition has led to a challenging situation in allareas of life. Bedouin society has lost its sources oflivelihood and traditional vocation (agriculture and sheeprearing) while at the same time an alternative economicsystem has not been developed. A system of personalsupport is therefore necessary, which is compatibleand for the most part more prolonged than the systemsof support currently existing. This system will enablethem to acquire basic tools in a manner that befitsthe characteristics of the Bedouin population, in orderto cope in the best possible way with the personal,professional and economic barriers facing them in theprocess of establishment of businesses and entry intothe business world.The following are examples of the specially designatedprojects for this population group:• Employment Center for the Bedouin Sector:According to data of the Central Bureau of Statistics,

the percentage of those in employment among the Bedouinpopulation is one of the lowest in the Country. It has thereforedecided to establish specially designated employment centersin the Bedouin localities. These centers will encompass thevarious subjects that relate to solving employment-relatedproblems and will attempt to remove most of the existingbarriers. The aims of establishing the Employment Centersinclude an increase in the number of Bedouin being integratedinto employment, assistance in the creation of initiativesand small businesses, an increase of the net income ofindividuals and Bedouin families and a change in perceptionsand traditional employment practices among the Bedouinpopulation.The Project is in conjunction with the "Joint" and the Ministry forDevelopment of the Negev and Galilee and is being carried outthrough the Community Centers Corporation.Target Group: residents of the Bedouin localities in the Negevwho are not engaged in salaried employment or self-employed,between ages 18-65.• Establishment of Specially Designated Fostering ofInitiative Centers (FIC) for the Bedouin Sector in theNegev - with the object of increasing the exposure of Bedouinbusinesses,helping them overcome the problem of the largedistances between the localities and to facilitate greateraccessibility of business owners in the sector to the variousservices that exist in the FIC, establishing a special extensionunder the FIC in Beersheba and supplying various services toentrepreneurs and small businesses in the sector. In additions,a number of bedouim advisors with a profound knowledge oflanguage and culture have been rtained to provide businesscounseling and oversee business.• Loans Fund for Small Businesses in the Bedouin Sector:With the object of encouraging initiatives among the Bedouinsector in the Negev and assisting in the establishment ofnew businesses and the expansion of existing businesses,it was decided to establish a Loans Fund which wouldprovide assistance to interested parties wishing to establisha business or expand the operation of an existing business.The aims of the Fund are to strengthen Bedouin Society andrelieve the unemployment situation among the Bedouin inthe Negev Region. The Fund is designated for the provisionof special loans for small businesses and for working capitalloans on preferential terms. NIS 5 Million has been allocatedto the Fund and its conditions are: a loan amount of up to NIS75,000 for a period of up to five years with the possibility ofa period of six months "grace" at prime rate interest. security- two personal guarantors. The Fund is being operated inconjunction with the Small and Medium Sized BusinessAdministration.Target Group: Entrepreneurs and Business Owners in theBedouin Sector in the Negev.21 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

EncouragementEncouragement and Support of Small Businessesand Support

Encouragement and Support of Small BusinessesDescription of the Project:The small and medium sized businesses are considered to be aprincipal factor in the growth of the national economy and in thecreation of places of employment They constitute a principal toolin the ability to achieve the goals of economic development andone of the main tiers in the economy and in Israeli Society. In viewof this, it was decided to create various programs and projectsfor the encouragement and support of small and medium sizedbusinesses in the Negev and in Galilee.The following are examples of a number of the speciallydesignated programs:• Remote Study - provides a solution in the sphere of trainingfor small and medium sized businesses in the outlying areas viathe internet. This is done through the holding of courses andinstruction by first rate lecturers via the internet, by removingthe restriction of a minimum number of participants and alsoproviding a solution in various spheres for geographicallydistant entrepreneurs.• Remote Businesses - development of infrastructures andtools in the sphere of marketing for businesses and increasingthe marketing circle of such businesses by means of "remotecontrol marketing" with the object of bringing about an increasein income and profits, and with the object of increasing thenumber of persons employed in such businesses as a resultof an increase of marketing and expansion of businessactivity. Every business in the Project is a recipient of the closesupervision of a leading marketing consultant and of a speciallydesigned aid package adapted to him in accordance with hisneeds.• Enterprise Centers for Students - Provides students andmembers of academic staff with appropriate tools for theenhancement and development of business initiatives tocreate new sources of employment in the Negev and Galilee.The essence of the Project is to promote and develop thequestion of initiatives in the outlying areas by close assistanceto the students and the academic staff and provide them withmanagement tools which will assist them in efficiently operatingthe businesses that are opened in the future. Such closeassistance will be afforded before and after the opening of theirbusinesses. In addition to this participants in the Project willbenefit from enrichment by means of conferences, lectures,courses and workshops on development initiative subjects.The Projects are being undertaken in conjunction with the Smalland Medium Sized Businesses Administration.Target Group:Small and medium-sized business owners and potentialdevelopers in the Negev and Galilee Region.23 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

VocationalTrainingVocational Training

Vocational TrainingThe expansion of vocational training on the basis of existing programsand the development of new programs with the object of increasing thenumber of vocationally trained persons in employment among the targetgroups - Bedouin, the Ultra-Orthodox, Immigrants, Students and SingleMothers. The goal is to increase the number of students who will beintegrated into the higher study tracks, to create and expand new circles ofemployment and to advance these sectors of the population into the worldof work by the training of human resources.Included in the various programs: technical and engineering trainingaccording to the needs of industry and the national economy in manyareas of know-how, vocational training and retraining for adults in a rangeof sectors, specially designated training programs for women.The programs are being operated in conjunction with the VocationalTraining Division in the Ministry of Industry, Trade and Labor and the Centerfor Technological Training (CTT).Target Group:Enterprises in the Negev and Galilee Region.25 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

26 < Invest in the Negev and Galilee

Dear investor and entrepreneur,This part of the pamphlet contains the essence of the information and benefits that the Ministry ofIndustry, Trade and Labor bestows to encourage investments in the Negev & Galilee, which Thegovernment has defined them as a national priority A area. The Negev & Galilee enjoys a list ofincentives and aiding tools, for the purpose of closing the gaps in development and life style levelbetween the national priority settlements and the rest of the country.In addition to the information presented here, you are welcome to visit our website: www.moital.gov.il/negevgalilee, and be exposed to additional details and explanations of the benefits andaiding tools that appear in this pamphlet.Sincerely,Avi Feldman, DirectorThe Negev and Galilee development CenterThe information in this pamphlet does not replace the relevant laws, but rather contains ageneral description of the terms and rights detailed in the law and in the ministry’s website.27 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

WAYS IN WHICH THE MINISTRY OF INDUSTRY,TRADE AND LABOR PROVIDES ASSISTANCEAid to ExportersThe Foreign Trade Administration of the Ministry of Industry,Trade and Employment is charged with formalizing andimplementing Israel's foreign trade policy, including operating asystem consisting of 35 trade attaches located in countries ofvital importance to Israel's foreign trade. These representativesare charged with the development of trade, technology andeconomic relations.The Commercial Attaches of the Foreign Trade Administrationform a bridge for strategic partners, distributors, agents, targetcompanies and potential investors and provide informationabout the local market and the possibilities that it embodies. Themain areas of activity of the Administration include: promotionof exports, formulation of import policy, control of trade levies,providing information about foreign markets and location ofbusiness opportunities.For further details see the website, the address of whichis: www.trade.gov.il1 The 200 x 2 Scheme for an increase of exportsDescription of the Project: encouragement of small exportersin the outlying areas who are exporting to the tune of from100,000 to 2 Million Dollars. The purpose of this projectis to bring a doubling of exports within a period of threeyears. The project has located approximately 200 potentialcompanies and includes the setting up of export-basedmarketing schemes in reliance on the Ministry of Industry,Trade and Labor's means of assistance, which are operatingintensively. The existing scheme will oversee and advicevatious companies through the enhancement of qualitativemanagement in industry, and the "Spark" scheme whichis designed to increase sales by innovation and marketingoversight for the financing of activities in Israel prior to salesoverseas. In addition,aid tools will be made available to thecompanies which will be adapted to the aim of the project,such as: support of marketing activities overseas.Target Group: small manufacturing enterprises.2. The Export Institute - the aim of the Institute is the promotionof industrial exports and the export of Israel's services andthe development of trade relations, collaboration and strategicalliances with foreign companies. The Institute is active inmany countries worldwide and supplies comprehensiveinformation to Israeli Companies in the sphere of international28 < Invest in the Negev and Galilee

trade, counseling, contacts and assistance in the promotionof exports, and also supplementary services for businessesoverseas. The Export Institute handles various matters,such as; business development, business information andintelligence, foreign contacts, delegations, trade fairs, foreigntrade studies, transport and logistics, etc.To contact the Export Institute and for further details, seethe website the address of which is: www.trade.gov.il3 AID FUNDS FOR MARKETING ABROAD:3.1 Combines' Fund:A combine is a consortium of companies that haveunified their activities in order to penetrate into newmarkets or achieve the penetration of a new lineof products. A combine will comprise at least 5manufacturing companies.The aim of the scheme is to assist in promoting themarketing of a new product or penetration into a newmarket, and this by the receipt of financing for marketingactivities abroad: maintaining offices and warehouses,advertising, market research, marketing advice, fairs andexhibitions, conferences etc.The grant is for 50% of the recognized marketingexpenses for the first year, 40% for the second year and30% for the third year.The target group is manufacturing companies whose totalturnover does not exceed 30 Million Dollars.3.2 The Development Fund for Marketing in the GlobalMarket by Grant of a State Guaranteed Loan:The purpose of the Fund: assistance to small and mediumsized exporters to promote marketing in the global market bythe financing of various marketing activities abroad such as:maintaining offices and warehouses, advertising, market research,marketing advice, fairs and exhibitions, conferences etc.The target group: Companies that are exporting or who areintending to export and whose sales turnover does not exceed15 Million Dollars.Extent of the Loan: 20% of revenues up to 1 Million Dollars.The loan can be obtained for a 3 year period. The loans are70% state guaranteed.3.3 Overseeing Marketing:The purpose of the scheme is to help provide supervisionfor small and medium sized companies in determiningmarket strategy, planning and organization for exporting, incollaboration with the Export Institute. The oversight project isbased on marketing consultants who oversee the companiesin action through formulation of an export strategy, preparationof market surveys, marketing program, conduct of negotiationsetc.The Target Group: The sales turnover of the businessamounts to a total of up to NIS 50 Million in the base year andemploys up to 100 employees. The amount of sales of thebusiness to the world market is a total of up to 2 Million Dollars.29 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

The exporters are entitled to up to 200 hours of advice.Financing the Scheme: 50% of the cost of advice time isfunded by the exporter and 50% is funded by the Ministry ofIndustry, Trade and Labor.Further Details Concerning the Aid Funds for marketingabroad can be found on the Ministry's website underAid for Industry and Businesses - The FinancingAdministration: www.trade.gov.il4. TRACKS FOR INTERNATIONAL COLLABORATION INRESEARCH AND DEVELOPMENTThe State promotes international collaboration in researchand development between Israeli and foreign manufacturingcompanies, with the object of assisting the Israeli companiesin creating strategic cooperation with suitable companiesoverseas and in that way to improve the competition capacityof the Israeli companies and their penetration into theinternational market.A number of models of international collaboration exist for suchpurpose: bi-national funds, bi-national agreements for parallelsupport, multi-national agreements, collaboration agreementswith multi-national corporations, ISERD, a framework programfor research and development of the European Union and theIsrael-USA Science and Technology Commission.The Industry Center for Research and Development(ICRD) - Provides collaboration in the sphere of researchand development on the international level. In order to assistIsraeli companies in the creation of strategic collaboration, theGovernment of Israel has in the last two decades concludedagreements with many countries in which each countryundertakes to assist in providing finance for its companies thatare participating in joint research and development projectswith Israel. There are various programs and collaborationschemes with various countries.Aims of the ICRD:• Promotion of international collaboration in research anddevelopment - between Israeli industry and leading industrialelements in Europe, North and South America, Asia and theFar East, and implementation of multi-international and interstateagreements in the sphere of research and development.• Assistance to hi-tech and technology enterprises - infinding international strategic partners, with whose help it will bepossible to realize the high technological potential of the Israelicompanies and to facilitate business leverage and penetrationinto the worldwide advanced technology markets.Further Details can be found on the website the address ofwhich is: www.trade.gov.il30 < Invest in the Negev and Galilee

Technological and Industrial Research and DevelopmentThe main advantage of the State of Israel lies in the existingpotential of its human resources and in its academic technologyinfrastructure. The way to realize such potential and turn it intoeconomic advantage is by investment in industrial researchand development. Investment in industrial research anddevelopment has a positive surplus yield for the economy.The office of the Chief Scientist in the Ministry is chargedwith implementation of Government policy for the support forindustrial research and development. The aim of the ChiefScientist is to develop technology in Israel as a means ofencouraging technological initiatives, exhausting the scientificpotential, increasing the know-how base, encouragementof high added-value research and development andencouragement of collaboration in research and developmenton a national and international level.1. Momentum Program - Aid to Start-Up TechnologyEntrepreneurs:The Aid Program for start-up technological initiatives in thepre-seed stage. The purpose of the momentum program isthe encouragement of innovation and technological initiativesby supporting the action that the developers must take at thebeginning of their initiatives and this in order to promote thenew technological concept prior to industrial realization.The Tracks of the Program:Aim of the ProgramThose Entitled to Apply:Expenses Recognized forSupport:Materials, expendablecomponents, subcontractors,technicaladvisors, marketconsultants, patent agents,presentation at exhibitionsMaterials, expendablecomponents, subcontractors,technicaladvisors, marketconsultants, patent agents,presentation at exhibitionsExtent of the Support:Start-UpEntrepreneursIndustrialDesignAid for a developer at the pre-R&D stage in order to provetechnological feasibility of orapplicability to the businessPromotion of the design conceptto the stage at which it will bepossible to actually implementit for development of a newproduct or improvement of a newproductPrivate individuals, startupcompanies and youngenterprisesPrivate designers or groups ofdesignersUp to 85% of the approvedbudget and to a grant ceilingof NIS200,000Up to 85% of the approvedbudget and to a grant ceilingof NIS100,00031 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

Aim of the ProgramThose Entitled to Apply:Expenses Recognized forSupport:Extent of the Support:Collaborationwith multinationalcorporationsPaving the way for Israelicompanies, and principallycompanies at the start of theirroad to the main global markets.The goal of the grant is theadaptation of the applicationor the technology of the Israelicompany to products of themulti-national corporationThe globally based corporations:IBM, Microsoft, Oracle, Alcatel.New and old IsraelicompaniesProfessional Manpowerservices, consulting servicesfor management of theProjects, loan of softwarematerials for developmentgrant of software licenses,assistance in marketingA grant of up to 50% of thebudget and up to a grantceiling of NIS 250,000Sun MicrosystemsDeutsche TelekomAssistance in strengtheningthe competitive capacity of themanufacturing enterprises bythe assimilation of researchand development activity in theenterprise.To enable small and mediumsized companies to examinethe technological feasibilityand/or marketing applicabilityof products in the sphere ofEnvironmental QualityUpgradingof TraditionalIndustryGreenMomentumSmall and medium sizedenterprises (up to 100employees) with no previousexperience in research anddevelopmentSmall and medium sizedenterprises (up to 100employees), possessing knowhow in the sphere of cleanmanufacturingA grant of up to 66% of theBudget and up to a grantceiling of NIS250,000A grant of up to 66% of theBudget and up to a grantceiling of NIS250,000Further Details about the Momentum Program can be found on the website the address of which is: www.tnufa.gov.il32 < Invest in the Negev and Galilee

2. The Incubators Program2.1 Incubator for Technology Ventures in Israel -The incubators are support frameworks which enable start-upentrepreneurs with innovative technological ideas to developtheir ideas for a commercial product and to establish a newbusiness for the purpose of its commercialization.The object is to handle the initial stage of technologicalventures - the provision of aid to the start-up entrepreneur tohelp realize the idea and to turn it into a commercial product.The incubators provide the entrepreneur, with the location,the financial resources, tools, professional guidance andadministrative assistance so that an abstract idea can beturned into a product that proves its feasibility, its advantagesand the need for it.Criterion for Approval: A technological concept that isinnovative in nature and whose purpose is to develop aproduct with marketing potential intended for a market ofsubstantial size.Promoter: Must be a start-up entrepreneur taking his initialsteps.Team: Approximately 3-6 development personnel.Period of Operation: The project stays in the incubatorfor a period of two years, when at the end of the two yearsthe promoter must bring his idea to the stage of a definedproduct which is both feasible and in demand.Activity Sector: In general terms - all spheres of researchand development although some of the incubators preferprojects that can derive benefit from the technologicalinfrastructure at their disposal.The Grant: up to 66% of the approved budget.Currently, there are 24 technology incubators operating allover the country, from Tel Hai in the North to Sde Boker in theSouth, with approximately 8 projects on average proceedingin each incubator. A project that is accepted into an incubatorreceives a loan from the State amounting to 85% of therecognized expenditure up to a level of NIS 2.1 Million for aperiod of two years with projects in the field of bio-technologyand pharmaceuticals being also entitled to support for a thirdyear in the incubator. Currently most of the incubator ownersare participating and are also taking the lead in the continuingrecruitment of companies in their portfolios.Of the 24 technology incubators, 15 incubators are operatingin the Negev and Galilee.2.2 Technology Based Industrial IncubatorStarting from 2008 there have been 2 industrial incubatorsoperating in Haifa and Arad. The industrial incubator isdesignated for the industrial foundation of technology/engineering-based companies or a company whose mainproducts have an industrial design slant, and that have passedthe stage of proof of technological feasibility, and which are33 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

intended for engaging in independent industrial manufacturingand commercial activity (including the software and processingsector) and which have been approved by the IndustrialIncubators Committee.The Industrial Incubator project is a program for the continuousengagement in research and development includingexperiments or engineering activity for perfection of theproduct (including Beta -Site), preparation for production and/or preparation of production portfolios and/or commencementof production of the product in small series, preparation inmarketing and/or commercialization of the products in the localand international market, raising investment for the projectcompany, designing the product, training of skilled personnelin production of the project, establishment of operationalinfrastructures, participation in professional exhibitions andconferences, and receipt of consulting services in a range ofareas connected with building the project company and itsindustrialization.The scale of the State's participation is up to 50% of theapproved budget, with the Industrial Incubators Committeehaving the authority to increase the rate of participation to upto 66% of the approved budget, this being only in respect ofnew project companies absorbed into an industrial incubatorin the outlying areas, that have not emanated from incubatortechnologies. In any event the State grant will not exceed atotal of NIS 500,000 per project in each year of operation.2.3 Bio-Technology Incubator-This incubator constitutes a center for ventures in the field ofBio-Technology and provides projects in the incubator with anorganizational framework and various appropriate resourceswhich assist in the carrying out of research and developmentprojects in the field of bio-technology.A project that is accepted into an incubator receives a loanfrom the State amounting on average to 80% of the recognizedexpenditure and up to a level of NIS 6.5 Million for a period of 3years.Further details about the Incubators Program can befound on the Ministry's website: www.moital.gov.il underIndustrial Research and Development - Chief Scientist.The Chief Scientist's Research and Development Fund-The Research and Development Fund provides support for aprogram of R&D for the development of an innovative product.The amount of the grant provided is between 20%-50% ofthe approved budget. The R&D is carried out in DevelopmentRegion A (namely, the Negev) which is entitled to an additionalgrant of 10% of the amount of the grant approved by the ChiefScientist's Research Committee. An addition of 25% to theamount of the grant decided by the Research Committee willbe provided for a research and development program beingcarried out in a region described as a "friction zone". Furtherdetails can be obtained on the Ministry's site under the heading"Industrial R&D - Chief Scientist".34 < Invest in the Negev and Galilee

3. The Framework Program of the European Union for R&DThis is the biggest program in global terms for scientific andindustrial cooperation. ISERD is the administrative bodyestablished by the Government of Israel to promote theparticipation of Israeli entities in the framework program.The current program - the seventh, is built from four mainprograms, which are engaged in the principal components ofEuropean R&D and which are detailed on the Administration'sWebsite. Participation in this program opens the door to Israelientities to strategic intergration into the research, developmentand marketing strategy in Europe. The criteria for the evaluationof a project seeking to participate in the framework programare: scientific and technological excellence, benefit, andquality of the consortium. The grants that are given to bodieswho qualify for financing are up to 75% of their expenditurefor carrying out the project and they are totally exempt frompayments of royalties and repayments.Further details of the seventh program are on theProgram Administration's website the address of whichis: www.iserd.org.il4. Generic Technological Development and transfer ofknow-how from Academia to Industry.5.1. Generic Technology R&D (GTRD) - "Magnet"-The "Magnet" Program operates within the office of the ChiefScientist with the aim of reinforcing the long term competitivetechnological advantage of industry in Israel by supporting thedevelopment of generic technology infrastructures that will actas a platform for the development of future products.Technological infrastructure development is based oncollaboration between a number of industrial corporations anduniversity research institutes which expresses itself in terms ofjoint activity as part of a consortium or association of the users.The amount of the grant provided in the GTRD framework toan industrial manufacturing company is 66%, and up to 80% tothe Research Institute.5.2. "Magneton" -Aim of the program is the encouragement of a transfer oftechnologies from academia to industry, in order to exploit theachievements of academic research in an industrial application,and for development of a product possessing economicpotential. The program is based on dual collaboration betweenthe academic research group and the industrial manufacturingcompany - and this by way of an aid grant for a project inorder to prove its feasibility, it being a working program of thepartners in terms of technological or system-related feasibilityfor continuation of product development in industry and tofacilitate an orderly transfer of technology from the researchbody to industry. The project period, and of the grant, isbetween 12 to 24 months.Extent of the grant: for an approved scheme, it will amount toup to 66% of the approved budget, with the approved budget forevery scheme being for an amount not exceeding NIS 3,400,000.35 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

5.3 "Nofar" - Industrial Application for Academic ResearchThe aim of the program is to bridge the gap between the basicand the applicative research, and to direct it towards industrialbasedrealization, in order to increase the applicative potentialof academic research - via the opportunity of directing it to anindustrial manufacturing sector with economic potential. Thework is only carried out in academia after the basic researchstage has concluded, being a preparatory stage before itscontinuation in other frameworks. The program is restricted tobiological fields.Initial applicative research, is research that does not qualify forsupport by the universities because it is not basic researchand is not sufficient to warrant support by industry or in the"Magneton" framework.Extent of the grant: research in the program qualifies for agrant of up to 90% of the approved budget, and all the knowhowrights will belong to the Research Institute. For every"Nofar" Project there must be an overseeing industrial companythat can provide professional instruction for the research andcontribute 10% to the financing of its cost. Upon conclusionof the research the overseeing company will be given the firstright of conducting negotiations with the Research Institute.The program is restricted to the fields of biotechnology andonly technology and for one year of research, the maximumresearch budget is up to NIS 466,000.5.4 "Katamon" - Encouragement of transfer of watertechnology from academia to industry -An additional aid program that operates within the frameworkof the Chief Scientist for the reinforcement and expansion ofthe technology base in the water sector, The object of thisprogram is to encourage local development of state of the arttechnologies which will form a basis for systems and solutionsin the water sector, by exploiting industrial resources andacademic know-how.The target group is comprised of an academic researcher, anindustrial manufacturing company and a water infrastructurecompany who will jointly make progress with technology upto the stage of proof of actual feasibility. The program is for aperiod of 30 months.The extent of the grant: up to 50% of the approved budgetfor the program to an amount not exceeding NIS 4.2 Million.The grant is made as a reimbursement of personnel for theprogram, sub-contractors, materials and depreciation of capitalequipment.For further information about Magnet, Magneton, Nofarand Katamon, see the website, the address of which is:www.magnet.org.il.36 < Invest in the Negev and Galilee

Aid to Small and Medium Sized Businesses1. Business TutoringThe business tuition program was established by theDirector of Finance and acts as a tool for assisting in theencouragement and promotion of small businesses in Israel.Aim of the Program: aid for the minor sized business, aswell as the small and medium sized, in the expansion andimprovement of its performance, its efficiency and raisingthe level of its profitability, and this so as to provide it withmanagement and implementation tools. The program makesprofessional advice available to the businesses provided byexperienced experts from the private sector.How does the Program operate:Diagnostic Stage: The operator meets a representative ofthe company and carries out a diagnosis and analysis of theactivity.Finding a suitable advisor: The operator finds tutors in therelative field taken from the list of tutors.The stage at which the tutor joins: A number of tutors areoffered to the company and the company selects the onethat is suitable for it.The operational stage: The company implements theprogram of activity with continual monitoring of the activity ofthe advisor by the operator.Extent of the Assistance: up to 150 hours of advice dependingon the size of the business and with financing by the Ministry ofup to 75% of the advice time.2. Industrial design -In recent years there has been international recognition of thestrategic value of industrial design and in innovation as toolsfor enhancing competitiveness in industry. Provision of aninnovative strategy and design in relation to industrial products,creates competitive advantages in the export markets.2.1 Advice for Industrial Design -The aim of the program: assistance to enterprises so thatthey can employ the services of an industrial designer fordevelopment of a new product or new line of products,conduct of an innovative strategy in design and in the design ofnew packaging for products, (including existing products).Target Group: Enterprises employing between 10-500 andwho are interested in obtaining design advice for: developmentof a product or a new line of products, strategic managementof innovation, design of new packaging, and any productdesign-related topic that could promote the business.Financing the Program: up to 150 hours of advice areprovided for each enterprise. In businesses of up to 10037 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

employees the Ministry will contribute 75% of the expenditure.For businesses of over 100 employees the Ministry willcontribute 50% towards the expenses.2.2 Operation and Promotion of Industrial Design -Aim of the program: the assimilation of industrial design byencouraging the participation of designers in internationalexhibitions, and award of prizes for industrial design. inaddition, the program will manage and promote public relationsincluding: support of seminars, production of advertising,production of an image-related film, and so forth.The target group: industrial designers, manufacturingcompanies and bodies that support industrial design.Extent of the financing: contribution of up to 75% towardsrecognized expenditure.3. "Spark" Program - Creative Management and Growth -Aim of the program: improving the creativity and constantinnovative management in various fields by the holding ofworkshops in the business premises, tendering advice tothe management staff and to other persons employed in theenterprise, on subjects such as: creative thought, innovativestrategy, location of new markets, etc.Target Group: manufacturing enterprises employing 10 to 250employees.Extent of the aid: up to 150 hours of advice. The Ministry willcontribute 50% - 75% per hours of advice according to thenumber of persons employed.The Target Group: a manufacturing enterprise employing10-500 employees, with a basic management structure that isinterested in the renewal of growth and makes a commitmentto dedicate the resources, management-time and investmententailed in the program.Financing the Project: businesses employing up to 100employees - up to 100 hours of advice time are providedfor each business and the Ministry will contribute 75% ofthe expenditure. Businesses employing more that 100employees - up to 150 hours of advice time are providedfor each business and the Ministry will contribute 50% of theexpenditure. The total amount of advice time in terms of hoursis up to 150 hours per enterprise, with the exception of thetechnique of "Tuition for Creativity and Innovation" in respect ofwhich the total time amounts to 250 hours.4. Qualitative Management Program -Aim of the program: assistance to managers of enterprisesin the introduction of modern management methods adaptedto the characteristics of the enterprise and its needs, with theobject of improving the enterprise's profitability, increasing theperception of excellence, encouraging the use of advanced38 < Invest in the Negev and Galilee

quality control technologies, enhancement of the productand its manufacturing processes, and encouragement ofadaptation to normal international procedures in industry byimprovement of work in the factory.Target Group: manufacturing enterprises employing between25-500 employees.Extent of the aid: up to 400 hours of advice time, with a 50%reimbursement of the consulting cost.5. State Guaranteed Loans Fund for Small BusinessesPurpose of the Fund: to provide loans for small businesses,for the purposes of working capital or of establishing/expandingthe business. The Fund dedicates aid resources to theimmigrant sector and to the Arab sector.Target Group: the loans will be provided for the benefit of smallbusinesses whose existence is economically justified andwhere there are grounds for helping them with bridging finance.Businesses whose annual turnover is up to NIS 22 Million andthat have up to 70 employees.Extent of the Aid: maximum loan is up to NIS 750,000 with a70% State guarantee. Preferential terms for businesses locatedin the area of Sderot and the Gaza surrounding beltPrerequisite Conditions: an annual turnover of up to NIS 22Million, up to 70 employees, with the business being ownedby individuals (i.e. not corporate ownership), not more than oneloan will be granted to the same body.Further details about the aid programs for smallbusinesses that are specified above, can be foundon the Ministry's - website - the Finance Director.www.moital.gov.il/finance39 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

Allocation of Land and Development Costs SubsidyThe Regional Development Director of the Ministry of Industry,Trade and Labor assists the expansion of employmentopportunities in the outlying regions by initiation, location,planning and filling industrial parks in national priority regions. Inrecent years the emphasis has been placed on the establishmentof joint regional industrial parks. The combined Authorities or theIndustrial Zone Administrations are charged with ensuring propermaintenance of these parks and for dealing with all the problemspertaining to the nature of the enterprises occupying them. TheDirector's activity necessitates the determination and updating ofthe criteria for the issue of infrastructure grants to entrepreneursseeking to establish enterprises in the various industrial parks.The Ministry of Industry, Trade and Labor - in liaison committeescommon to the Israel Lands Administration and the Ministryfor the Allocation of Land - recommends the allocation of landwithout a tender for the purposes of factory construction, andin special cases it recommends the allocation of land without atender for leasing purposes.Industrial ZoneDevelopment Expenses in NISper Dunam for IndustryAlon Tabor 130,145Beersheba 82,122Goren 40.175Dimona 32,888Dalton 73,850Hatzor Haglilit 82,384Yeruham 45,890Lehavim 100,610Migdal Ha'amek 128,957Mishor Rotem 34,923Ma'aleh Gilboa/Hever 142,818Set out below is a table in respect of development expenses forthe allocation of land to an entrepreneur, in the Negev and GalileeMa'alot-Tarshiha 50,612Mitzpeh Ramon 24,42040 < Invest in the Negev and Galilee

Industrial ZoneDevelopment Expenses in NISper Dunam for IndustryIndustrial ZoneDevelopment Expenses in NISper Dunam for IndustryNoam 116,979Nazareth 184,331Upper Nazareth 205,600Sakhnin 119,933Emekim Saguy 2000 140,611Afula 120,637Arad 52,844Zva'im 116,257Tsahar 118,095Zipporit 152,727Safed 74,834Kadmat Galil 120,043Katzrin Bnei Yehuda 69,912Kiryat Gat 150,458Kiryat Shmoneh 28,358Rahat 82,712Ramat Hovev 54,945Ramat Negev 67,549Segev-Shalom 48,446Sderot 51,859Shlomi 39,584Shaar Hanegev 58,096Shfaram 203,236Tefen 126,432The Ministry encourages Regional Administrations of IndustrialZones to act in conjunction with Local Authorities comprisingminority population residents for the purpose of jointadministration, by giving the Administration incentives - NIS 0.5Million per annum for a period of three years.Further details can be found on the Ministry's website -Development and National Priority Regions.41 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

Establishment of an Enterprise - Aid TracksThe Investment Center at the Ministry of Industry, Trade andLabor operates under the Encouragement of Capital InvestmentsLaw, 5719-1959. The Center encourages the establishment andexpansion of industrial enterprises, hotels and tourism-relatedbusinesses by granting the status of an "approved enterprise" toa scheme of investment in an enterprise provided that it satisfiesthe following conditions: 25% or more of its total income in thetax year from sales to a certain market is from sales to a certainmarket which numbers at least 12 million inhabitants - and alsothe other conditions set out in detail in Section 18A (b) of the Law.The aims for the Investment Center for the grant of "approvedenterprise" status are: advisability in terms of the nationaleconomy, ability to compete in international markets, innovativetechnologies, places of employment, satisfying the State'srequirements. Two benefit tracks exist within the framework of theLaw: the grants track and the tax benefits track.1. The Grants TrackAs part of the grants' track, a corporation is entitled to thefollowing grants and tax benefits in the Negev Region as detailedbelow:The grant is made as a percentage of the investment in fixedassets that is included in the approved scheme and is eligible fora grant. The approved scheme only includes investment in fixedassets, equipment and new buildings, and will be included in the42 < Invest in the Negev and Galileeapproved scheme at the Administration's discretion. Under theLaw and the Investment Center's rules and regulations, approvalcan be obtained to include in the scheme imported second-handequipment that has not become technologically obsolete.Tax BenefitsAn approved enterprise in Development Region A is entitledto 2 years exemption from Corporation Tax and to a reducedlevel of tax during the remainder of the "tax-break" period, onundistributed income. If profits are distributed the owners will beliable for reduced dividend tax and the company will be chargedthe rate of tax it would have paid had it not chosen this track.Amount of the Grants:Industry and Buildings -On an investment of up to NIS 50 Million - 24%On an investment of more than NIS 50 Million - 20%TourismHotels, accommodation and others - 24%Other tourist projects - 15%2. The Benefits Track2.1 Alternative Track ("The Green Track")Benefits on this track are granted to Ltd Companies only or to

co-operative societies who do not attribute profits to membersof the society. This track is processed exclusively by the TaxesAuthority.A corporation wishing to obtain tax benefits in respect of itsmanufacturing activity, and subject to its meeting the conditionsdetailed below, should apply for such benefits to the TaxesAuthority:2.1.1 Completion of Minimum Qualifying Investment1. Purchase of "productive assets": which serve the enterpriseor that are intended to serve the enterprise; in an industrialenterprise (with the exception of buildings); also includingassets not owned by the enterprise.2. Completion of the investment within a period of not exceeding3 tax years or in 2 years, at the corporation's choice.3. The amortization, for the purpose of calculating the productiveassets, is calculated in accordance with the 1941 [sic]Depreciation Regulations.4. The minimum amount of the qualifying investment inaccordance with the total of the productive assets in theenterprise (including associated enterprises) as detailed below:Setting upExpansion(the higher of thetwo)Value of theProductive Assetsin NIS millionsNo limitationUp to 140 or140 - 150 or500 and above orInvestmentAmountsAt least NIS 300thousand12% of theproductive assets7% of the productiveassets5% of the productiveassets2.2 Improved Track (for a period of ten years)It is not possible to transfer from this track to the alternative trackduring the benefit period.There is exemption from Corporation Tax on this track for a periodof ten years for investors in Development Region A.ReducedCorporation TaxDividend TaxIsraeli Investor 11.5% 15%Foreign Investor 11.5% 4%43 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

2.3 The Strategic Investments TrackSubject to meeting the conditions detailed below (in addition tomeeting the conditions specified in Section 18A(c) of the Law),a corporate body is entitled to full exemption from CorporationTax and a full exemption from tax in respect of taking a dividendduring the benefits period.Development Region Minimum Qualifying Investment Total Earnings in the GroupThe TotalAs per Ministers'DecisionThe TotalAs per Ministers'DecisionQualifying Region (distant outlyingareas) - Acre, Carmiel and the North NIS 600 millionNIS 13 billionBeersheba, Arad and the SouthPriority Region A NIS 900 million NIS 600 million NIS 20 billion NIS 13 billion2.4 The Tax Breaks for an Approved EnterpriseThe Tax Breaks for an Approved Enterprise are granted for a periodof seven consecutive years commencing from the year in whichthere was, for the first time, income that is liable for tax, providedthat 14 years have not elapsed since the year in which approvalwas granted and 12 years since the year in which, accordingto the determination of the Investment Center in the Ministry ofIndustry, Trade and Labor, the enterprise was operational, or fromthe year of choice or the tax year that was approved in respect ofa beneficiary enterprise, as the case may be.The Tax Breaks period for an enterprise that is at least 25%owned by a foreign investor, is 10 years.44 < Invest in the Negev and Galilee

Local InvestorownedCompanyCompany90%-100%owned byForeign InvestorCompany74% - 90%owned byForeign InvestorCompany49% - 74%owned byForeign InvestorCompanythat is notan ApprovedEnterpriseChargeable Income 100% 100% 100% 100% 100%Corporation Tax 25% 10% 15% 20% 29%Balance of chargeable income 75% 90% 85% 80% 71%Total Tax on undistributedincome25% 10% 15% 20% 29%Dividend Tax (on the balance) 15% 15% 15% 15% *25%Dividend Tax (balance ofchargeable income x the tax 11.25% 13.5% 12.75% 12% 16.5%rate)Total Tax on DistributedIncome36.25% 23.5% 27.75% 32% 45.5%* In a distribution to an individual or to a foreign resident company - in a distribution to an Israeli company - zero.45 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

Placement of New Employees1. Employment Track -As part of the employment track, assistance is provided inrespect of engagement of employees in the form of the paymentof grants as a percentage of the employees' salaries. Three aidschemes are operating in this framework.A. An employment track in which assistance is provided for 30months on two subsidiary tracks:1. The general track in the "outlying areas" - a graduatedamount of assistance is provided, varying between 15%- 30% during the first 10 months, 5% - 10% during thelast 10 months depending on the size of the Company. InDevelopment Region A, the aid varies between 5% - 25%depending on the size of the Company.2. The special population group track (minorities, ultraorthodox,handicapped, single parents). The track isavailable all over the country to entrepreneurs who employ90% of these population groups and the amount of aidvaries between 35% in the initial months to 10% in the lastmonths. Minimum employment on these tracks is 5 jobsand the wage ceiling for assistance is NIS 15 thousand.B.Initiatives for development of the outlying regions:Within this framework, aid is provided for two types of enterprises:1. High salary earning enterprises (minimum wage costof 250% of the national average wage). The minimumemployment is 15 employees in the "outlying" regions,when the aid will vary between 35% in the first year and5% in the fourth year. An advance payment will be madewhen the required minimum is reached and with additionalassistance to those taking early steps to recruit employees.2. Firmly based enterprises. In this framework, the assistanceis provided to companies with a turnover of more thanNIS 100 million, and with a minimum employment of 100jobs when the required wage cost is 150% of the nationalaverage wage.C.Sending employees on paid leave (Agreed Leave):Assistance is provided to enterprises that employ more than 25employees, to send employees on paid leave. The employercan remove up to 100 employees from any paid leave cycle fora period of 3 months. During this period, the employer will paythe social benefits for employees up to 18% of the last salaryand high salary unemployment grant. This cost will be financedby the State as a grant to the employer.Further details can be found on the website of the Ministryof Industry, Trade and Employment - Investment Center.46 < Invest in the Negev and Galilee

Invest in theNegev and Galilee Development Strategic PlanNegev and Galilee47 < Invest in the Negev and GalileeMinistry of Indusry, Trade and Labor > Negev and Galilee Development Center

STATE OF ISRAELMinistry of Indusry, Trade and LaborMinister of Development of the Negev and GalileeNEGEVGALILEEIsrael’s Land of PossibilitiesInvest in theNegev & GalileeNegev and Galilee DevelopmentStrategic Planwww.moital.gov.il/NegevGalilee

STATE OF ISRAELMinistry of Industry, Trade and LaborMinister of Development of the Negev and Galileeproduction: Government Advertising BureauNegev and GalileeDevelopment Center,Ministry of IndusryTrade and Labor,5 Bank Israel St.Jerusalem, Israel 91000www.moital.gov.il/NegevGalileeFax: 02-6662680