WORLD TRADE  
ORGANIZATION   
G/SCM/N/155/ISR 
G/SCM/N/186/ISR 
G/SCM/N/220/ISR 
11 November 2011 
 (11-5819) 
Committee on Subsidies and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994 and 
Article 25 of the Agreement on S ubsidies and Countervailing Measures 
 
ISRAEL 
   The following communication, dated 9 November 2011, is being circulated at the request of 
the Delegation of Israel. 
 
_______________ 
 
  Pursuant to Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies 
and Countervailing Measures ("SCM Agreement"), pl ease find enclosed Israel's new and full subsidy 
notification for the period 2005-2009.  
 The delegation of Israel notes that in acco rdance with Article 25.7 of the SCM Agreement, 
the notification of the measures concerned does not pr ejudge their legal status, effects or nature under 
the GATT 1994 and the SCM Agreement. G/SCM/N/155/ISR 
G/SCM/N/186/ISR G/SCM/N/220/ISR 
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  TABLE OF CONTENTS 
 
Page 
I.  INTRODUCTION .................................................................................................................. .. 4 
II.  RESEARCH AND DEVELOPMENT .................................................................................... 4  
1.  Research and De velopment ......................................................................................................  4 
2.  Long Term R&D Support for Large Investors in Industrial R&D ...................................... 5  
3.  Magnet Programmes ............................................................................................................. ... 6 
4.  The Incubators Programme ..................................................................................................... 8 
5.  Government Seed Fund (Heznek) ......................................................................................... 10  
6.  Tnufa ......................................................................................................................... ............... 11  
7.  Support for Research Institutions ......................................................................................... 12  
8.  Project Center for Multinational Companies ....................................................................... 13  
III. AID TO SMALL AND MEDIUM-SIZED COMPANIES BY THE SMALL AND 
MEDIUM ENTERPRISES AUTHORITY ........................................................................... 14  
1.  Small and Medium Enterprises Authority ........................................................................... 14  
IV.  SUPPORT FOR EMPLOYMENT AND TRAINING ......................................................... 15  
1.  Business Tutorial Programme ............................................................................................... 15  
2.  Quality Management Programme (introduction to advanced managerial 
systems) ...................................................................................................................... .............. 16  
3.  "Nitsos" Programme (Cre ative Management) ..................................................................... 17  
4.  The Industrial Design Tutoring Programme ........................................................................ 18  
5.  Training Courses for Adults .................................................................................................. 19 
6.  On the Job Training ........................................................................................................... .... 20 
7.  A Grant to Newly Released Soldiers who work in High Demand Jobs .............................. 21  
V.  OTHER FORMS OF SUBSIDIES ........................................................................................ 22  
1.  Marketing Tutorial Program ................................................................................................. 22  
2.  Consortia Program ............................................................................................................. .... 23 
3.  Development of Marketing to World Markets Fund (Since 2006, "The Exporter's 
Assistance Fund") ............................................................................................................. ...... 24 
4.  "200 X 2" – "Two Hundred Times Two" ............................................................................. 25  
5.  Employment Grant Program ................................................................................................. 26  G/SCM/N/155/ISR 
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  6.  Investment Incentives in the Law for the En couragement of Capital  Investment ........... 27  
7.  Fund for Labour Intensive Enterprises in Financial Distress ............................................ 28  
8.  Cost of Land Development ..................................................................................................... 28 
9.  Eilat Free Trade Zone ......................................................................................................... ... 29 
10.  Free Port Zone ................................................................................................................ ........ 30 
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  I. INTRODUCTION 
 This notification relates to m easures which are currently in force and provides, as far as 
possible, statistical inform ation at least up to the end of 2009.  This notification combines Israel's new 
and full notifications of 2005, 2006, 2007, 2008 and 2009. 
  A considerable effort has been undertaken by the Government of the State of Israel to submit comprehensive notifications in accordance with th e requirements of the Subsidies Agreement.  The 
notifications follow, as far as possible, all the elements required by Artic le 25.3 of the Subsidies 
Agreement and by the subsidies questionnaire. 
  In accordance with Article 25.7 of the Subsidie s Agreement, the fact that a measure has been 
notified, does not prejudge either its legal status  under GATT 1994 or this Agreement, nor does it 
prejudge its effects under the Agreement or the nature of the measur e itself.  Furtherm ore, this does not 
come to imply in any way, that any of the measures  notified, wholly or partly, amounts to a specific 
subsidy.  
II. RESEARCH AND DEVELOPMENT 
1. Research and Development 
The Authority Responsible for the Subsidy 
 
 The Office of the Chief Scientist at the Ministry of Industry, Trade and Labour.    Legal Basis 
 
 The Law for the Encouragement of Industri al Research and Development, 5744-1984.   
 Policy Objective and/or Purpose 
  The purpose of the Law is to encourage and support industrial research  and development in 
order to foster the development of technology-oriente d industry in Israel and to create employment 
opportunities for Israel's  scientific and technol ogical workforce.   
 Form of the subsidy 
  Grants are from 20 per cent to 50 per cent of total approved R&D expenditures. 
 
 Grants shall be repaid in the form of royalties as a percentage of the total revenues derived from 
the sale of the product developed up to the entire amou nt of the grant in US$ terms, with the addition of 
yearly interest  equal to the Libor rate.  To Whom the Subsidy is Provided 
  The support is provided to projec ts of research and development in all sectors, provided they are 
aimed at the discovery of new knowledge for the de velopment of new products or processes or for the 
substantial improvement of exis ting products or processes.  G/SCM/N/155/ISR 
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  Duration 
 
 Ongoing.   
 
Budget/expenditure 
  Actual Annual Disburseme nt (in thousands US$) 
 
 2005:  159,000 
 2006:  175,000  2007:  194,000  2008:  262,000  2009:  296,000 
 
Trade Effects 
  The products or processes financed by the programme are innovative and cannot therefore 
compete with existing products.  Normally, further wo rk is necessary for the results of an R&D project 
to lead to a commercially exploitable process or  product.  Therefore, the programme has no direct 
impact on trade. 
 
2. Long Term R&D Support for Large Investors in Industrial R&D 
The Authority Responsible for the Subsidy 
 
 The Office of the Chief Scientist at the Ministry of Industry, Trade and Labour.   
 Legal Basis 
  Directives of the Director General of the Ministry of Industry, Trade and Labour.    
Policy Objective and/or Purpose 
 
 The purpose of this programme, operating sin ce 22 August 2001, is to encourage and support 
substantial investments in long-term i ndustrial research and development.  
 
Form of the Subsidy 
 
 Grants are from 20 per cent to 50 per cen t of total approved R&D expenditures.   
 To Whom the subsidy is provided 
 
 The support is provided to companies in all sectors engaging substantial am ount of resources 
in R&D.  To be eligible, the company must  comply with the following criteria:   
 
 Employs over 200 R&D employees or has an annual R&D budget exceeding US$20 million; 
 
 Its yearly revenues exceed US$ 100 million;  
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   Has repaid all royalties due to the Office of the Chief Scientist for support received under the 
Law for the Encouragement of Indust rial Research and Development; 
 
 Does not currently receive any support under the Law for the Encouragement of Industrial 
Research and Development; 
 The request for support does not exceed 20 per cent of its yearly R&D budget; 
 The support is requested for long-term R&D project. 
Budget/Expenditure 
 
 Actual Annual Disbursement (in thousands US$)  
 2005:  17,000 
 2006:  21,200  2007:  22,600  2008:  19,800  2009:  20,600  
Duration 
 
 Ongoing.    Trade Effects 
  The programme finances long-term  generic research and development expenditures;  as such it 
has no direct impact on trade.    
3. Magnet Programmes 
The Authority Responsible for the Subsidy 
 
 The Office of the Chief Scientist at the Ministry of Industry, Trade and Labour.    Legal Basis 
 
 Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 Policy Objective and/or Purpose 
 
 The general purpose of these programmes is to encourage the development of innovative 
generic technologies through coopera tion between academic research in stitutes and industry.  To this 
end, three different routes  have been established: 
  3.1 – Magnet Consortia  (the Central Programme), operating since 1994 
 3. 2 – Mini-Magnet (Magneton) , established on 22 August 2001 
 3.3 – NOFAR , established on 1 June 2004 
 3.1 – Magnet Consortia  G/SCM/N/155/ISR 
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  Policy Objective and/or Purpose 
 
 The purpose of the subsidy is to encourage the long-term development of innovative generic 
technologies which have wi de ranging applications in numerous industries. 
  To qualify as a Magnet R & D programme, the project must satisfy the following criteria:   
 
 The technology to be developed is crucial to  maintain the competitiveness of companies; 
 
 The technology cannot be acquired from commercial  sources at competitive prices and delivery 
schedules; 
 
 The potential sales are sufficient to economically  justify the R & D investments and the costs of 
development, manufacturing and marketi ng of products resulting from the R & D; 
 
 At least three of the participating companies and at least one academic institution have formed 
and registered a consortium and signed a collaborative agreement. 
 
Form of the Subsidy 
  Grants calculated as 66 per cent of the approved R&D expenses.  Academic research institutes participating in the c onsortium are entitled to a grant of up to 80 per cent of their approved 
budgets, the remaining 20 per cent to be financed by  the industries participating in the consortium.  
Since the budget of the academic research ins titute may not exceed 25 per cent of the total 
programme, the maximum overall rate of support to  the consortium is approximately 70 per cent, 
while the effective rate of support to the particip ating companies is approximately 60 per cent.   
 To whom the Subsidy is Provided 
  The subsidy is provided to a consortium of  manufacturers and academic institutions.   
  3.2 – Mini Magnet (Magneton)  
 
Policy Objective and/or Purpose 
 
 The purpose of the subsidy is to encourage the transfer of technologies from academic research 
institutes to Industry, based on a dual cooperation be tween an academic resear ch group and an industrial 
company.  
Form of the Subsidy 
 
 Grants calculated as 66 per cent of the approved R&D expenses, which may not exceed NIS 3,400,000, for a period of up to 2 years of activity, while the industry finances all the complementary costs.  
 
To whom the Subsidy is Provided 
  The subsidy is provided to a dual cooperatio n between an industrial company and an academic 
research institute.   
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   3.3 – NOFAR  
 Policy Objective and/or Purpose 
 
 The purpose of the subsidy is to encourag e applied research activ ities in biotechnology 
implemented by scientific re search institutes through their own staff, in order to direct them to industrial 
needs.  
Form of the Subsidy 
 
 Grant up to 90 per cent of the approved R&D budget  of the research institute and not more than 
NIS 420,000, for a period of up to 15 months.  The complementary expenses up to 100 per cent of the 
total cost, shall be financed by an industrial comp any, which must be capable of contributing in the 
direction of the R&D program.  The company, howev er, has no rights on the outcome of this research. 
 To Whom the Subsidy is Provided 
  The subsidy is provided only to research institutes.   
  
Budget/Expenditure for all Magnet programmes 
 
 Actual Annual Disburseme nts (in thousands US$) 
  2005:  41,000 
 2006:  46,000 
 2007:  46,000  2008:  53,000  2009:  58,000  Duration 
  Ongoing.    Trade Effects 
 
 Since the Magnet programmes are aimed at expa nding the technological infrastructure, they 
have no effect on trade.  Furthermore, the results are shared among  partners.  One of the main benefits 
lies in strengthening cooperation between  industry and res earch institutes. 
 Other Information 
 
 The subsidy is provided annually during the project's approved duration and it is up to 
66 per cent of the approved budget to industrial compan ies, while the participating research institute is 
assured full coverage for its R&D expenses, by me ans of grants and comp lementary financing by 
participating industr ial company.   
 4. The Incubators Programme 
The Authority Responsible for the Subsidy 
 
 The Office of the Chief Scientist at the Ministry of Industry, Trade and Labour.    G/SCM/N/155/ISR 
 G/SCM/N/186/ISR 
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  Legal Basis 
 
 Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 
Policy Objective and/or Purpose 
 
 The purpose of the programme is to promot e and support the creation of start-up companies 
based on innovative new products and technologies,  initiated by individuals (not by existing 
companies). 
  4.1 - Technological Incubators  
  Under the incubator programme, a grant is given for a period of two years for the R&D 
expenses.  The grant constitutes 85 per cent of the approved R&D budget, with a maximum of 
NIS 2,100,000 per two years.  If the project is su ccessful, the grant must be fully repaid to the 
Government of Israel.   To Whom the Subsidy is Provided 
 
 The subsidy is provided to individuals: scientists, inventors, beginning entrepreneurs, 
presenting an innovative technological idea, with marketing potential, which still need two years 
R&D.  The projects responding to these specified criteria are selected by the Incubators programme management and approved by a committ ee formed by the Chief Scientist. 
 
 4.2 -  Technology based industrial incubators 
 Form of the Subsidy 
  Under the incubator programme, a grant is given for a period of two years for the R&D 
expenses.  The grant constitutes 50 per cent (or 66 per cent for incubator in preference areas) of the 
approved R&D budget, with a maximum of NIS 2,000, 000 per two years.  If the project is successful, 
the grant must be fully repaid to the Government of Israel.     To Whom the Subsidy is Provided 
 
 The subsidies in this programme, initiated in 2007, are provided to less innovative projects that 
are not appropriate as technologica l incubators but, with early su pport and guidance in manufacturing 
and commercialization, still have potential to become successful businesses.     4.3 - Biotechnology designed incubators  
 
Form of the Subsidy 
 
 Under the incubator programme, a grant is given for a period of three years for the R&D expenses.  The grant constitutes 85 per cent of th e approved R&D budget in the first year with a 
maximum of NIS 2,295,000, 80 per cent in the second year with a maximum of NIS 2,160,000 and 
75 per cent in the third year with a maximum of NIS 2,025,000.    
 To Whom the Subsidy is Provided 
  The subsidies in this programme, initiated in 2005, is provided to bio-tech projects.   G/SCM/N/155/ISR 
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  Budget/Expenditure for all Incubators programmes  
 
 Actual Annual Disbursements (in thousands US$) 
 
 2005:  31,000  2006:  33,000  2007:  33,000  2008:  50,000 
 2009:  50,300 
 Duration 
  Ongoing.   
 
Trade effects 
  In light of the scope and nature of the R& D activity being assisted, it is not possible to 
determine what, if any, trade effects may ever result from this programme.    
Other Information 
 
 This programme has proved itself as one of th e most efficient and productive leverage for 
private investment in start-ups creating employment opportunities for scientists.    5. Government Seed Fund (Heznek) 
The Authority Responsible for the Subsidy 
 
 The Office of the Chief Scientist at the Ministry of Industry, Trade and Labour.    Legal Basis 
  Directives of the Director General of the Ministry of Trade, Industry and Labour.    Policy Objective and/or Purpose 
 
 The purpose of the programme, initiated in Ja nuary 2003, is to create an additional and 
separate vehicle to mobilize investments for th e establishment of new start-up companies (Seed 
companies) whose primary activity is research and development.    Form of the Subsidy 
 
 State investment in the share capital of the Seed  Company, in parallel to the investor, in an 
amount equal to up to 66 per cent of the approved R& D expenses for a period of two years, up to a 
maximum of NIS 5 million for the execution period of two years, and not more than 50 per cent of the total working R&D plan.    
 The investor will have the option to purchase a ll State's shares at a purchase price equal to the 
total amount of State's investment plus interest.  G/SCM/N/155/ISR 
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  To Whom the Subsidy is Provided 
 
 The subsidy is provided to seed companies whose main activity is R&D, that have not been in 
existence for more than 6 months and have not incurred more than US$ 250,000 in expenses since 
their establishment.    Budget/Expenditure 
 
 Actual annual disbursements (in thousands US$) 
 2005:  3,100  Duration 
 
 Not an active program since 2005.  This program is not budgeted due to lack of demand.   
 Trade Effects 
  In light of the scope and nature of the R& D activity being assisted, it is not possible to 
determine what, if any, trade effects may ever result from this programme. 
 
Other information 
  A seed company must obtain parallel investment from a private investor (such as venture capital fund), which should be at least in the amount of the State's investment.   
 
6. Tnufa 
The Authority Responsible for the Subsidy 
 
 The Office of the Chief Scientist at the Ministry of Industry, Trade and Labour.    
Legal Basis 
 
 Directives of the Director General of the Ministry of Industry, Trade and Labour.    Policy Objective and/or Purpose 
  The purpose of the programme, initiated in Au gust 2001, is to encourage and support 
technological entrepreneurs at the pre-seed stage, dur ing the earliest stages of their projects, to help 
them in the evaluation of the technological and econom ic potential of the idea, preparation of a patent 
proposal for submission to patent authorities, co nstruction of a prototype, and preparation of a 
business plan. 
 
Form of the Subsidy 
  Grants of up to 85 per cent of approved expenses up to a maximum of NIS 210,000.   
 
To Whom the Subsidy is Provided 
 
 The subsidy is provided to entrepreneurs presenting a plan to promote a new innovative technological idea.   G/SCM/N/155/ISR 
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  Budget/Expenditure 
 
 Actual annual disbursements (in thousands US$) 
 
 2005:  2,500  2006:  2,800  2007:  3,200  2008:  4,000 
 2009:  4,320 
 Duration 
  Ongoing.   
 
Trade Effects 
  In light of the scope and nature of the R& D activity being assisted, it is not possible to 
determine what, if any, trade effects may ever result from this programme.  7. Support for Research Institutions 
The Authority Responsible for the Subsidy 
 
 The Office of the Chief Scientist at the Ministry of Industry, Trade and Labour.    
Legal Basis 
 
 Directives of the Director General of the Ministry of Industry, Trade and Labour.    Policy Objective and/or Purpose 
 
 This programme, initiated in 2004, is designed fo r research institutions with clear linkage to 
the industry, to strengthen their technology infrastructure in order to develop technologies and products which are relevant for industry but cannot be fully developed by industry.   
 Form of the Subsidy 
  Grants of up to 90 per cent of approved expenses are available.    To Whom the Subsidy is Provided 
  The subsidy is provided to any research institute that is an independent legal entity, employs a 
team of researchers with proven scientific a nd technological ability, maintains equipment for 
conducting and testing R&D in industry and obtains at  least 30 per cent of its revenue from research 
and testing for industry.  Budget/Expenditure 
  Actual annual disbursements (in thousands US$)   2005:  1,450  G/SCM/N/155/ISR 
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   2006:  1,370 
 2007:  1,490  2008:  1,300 
 2009:  3,800 
 Duration 
  Ongoing.   
 
Trade Effects 
  Since the programme is aimed at expanding R& D activities of research institutes, it has no 
effect on trade.   
 
8. Project Center for Multinational Companies 
The Authority Responsible for the Subsidy 
 
 The Office of the Chief Scientist at the Ministry of Industry, Trade and Labour.    
Legal Basis 
 
 Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 Policy Objective and/or Purpose 
 
 This programme, initiated in 2008, is inte nded to encourage multi-national companies to 
conduct joint R&D programs with Israeli partners (c ompany or academic institute) to form project 
centers, while focusing the activity in the national pr eference areas and/or in traditional industry.   
 Form of the Subsidy 
  Government financing will be the lowest of the following:    
 40 per cent of the project center's operating expenses;   
 50 per cent of the accumulated investment funding given to the Israeli partner in the project;   
 accumulated investment funding given to the Israeli partner in national preference areas or;   
 from traditional industry. 
 To Whom the Subsidy is Provided 
  The subsidy is provided to a company that complies with all the following conditions:  
 The overall turnover of the company exceeds US$ 2. 5 billion in the calendar year prior to the 
submission of the application;   
 An industrial company in the traditional or mixed industry sectors.   
 
Budget/Expenditure 
 
 Actual annual disbursements (in thousands US$) G/SCM/N/155/ISR 
G/SCM/N/186/ISR G/SCM/N/220/ISR 
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   2008:  560,000 
 2009:  510,000  
Duration 
 
 Ongoing.    Trade Effects 
  Since this is a new program me it is still early to determ ine its trade effects.   
 
III. AID TO SMALL AND MEDIUM-SIZED COMPANIES BY THE SMALL AND 
MEDIUM ENTERPRISES AUTHORITY 
1. Small and Medium Enterprises Authority 
The Authority Responsible for the Subsidy 
 
 Israel Small and Medium Enterprises Authority.   
 Legal Basis 
  Government decision.    Policy Objective and/or Purpose 
 
 The purpose of the programme is to aid ow ners and entrepreneurs of small businesses in 
establishing, managing and expanding their business.    Form of the Subsidy 
  State loan guarantee.  As of September 2003, by means of a State deposit at the bank offering 
the best terms of loans and parallel guarantees to  small business. The credit limit for a single business 
is NIS 500,000.  The loan is given for a period of up to five years.   The Israel Small and Medium Enterprises Aut hority also initiates the establishment of SBCDs 
(Small Business Development Centres) and suppor ts them by providing professional guidance and 
assistance.  These centres are meant to serve as a central address for small businesses owners and 
entrepreneurs planning new businesses.  They are designed as "one-stop shop" which respond to a 
variety of this group's business management needs.    To Whom the Subsidy is Provided 
 
 Small and Medium Enterprises with emphasis to disadvantage populations. 
  Loans with government guarantee are provided to small firms with up to 70 employees and an annual turnover of up to NIS 22 million.  G/SCM/N/155/ISR 
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  Budget/Expenditure 
 
 Actual Annual Government Expenditure (incl uding the operation of Isr ael Small and Medium 
Enterprises Authority) (in thousands of NIS) 
  2005: NIS 17,500  2006: NIS 14,600  2007: NIS 13,300 
 2008: NIS 13,300 
 2009: NIS 15,700  Duration 
 
 Ongoing.   
 Trade Effects 
  In light of the scope and nature of the assistan ce, it is not possible to determine what, if any, 
trade effects may result from this programme.   
 
Other Information 
  The Authority was established in 1994, follo wing a recommendation by the Public Committee 
to encourage small businesses.  Israel Small and Medium Enterprises Authority is an autonomous, 
non-profit organization which is being fina nced by the Israeli Government.   
 
IV. SUPPORT FOR EMPLOYMENT AND TRAINING 
1. Business Tutorial Programme 
The Authority Responsible for the Subsidy 
 
 The Finance Administration at the Mini stry of Industry, Trade, and Labour.   
 Legal Basis 
  Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 
Policy Objective and/or Purpose 
 
 The purpose of the programme is to supply sma ll- and medium-sized businesses, especially in 
disadvantaged areas, with managerial tutoring , in order to enhance their management and 
performance. 
 
Form of Subsidy 
  Grants amounting to 75 per cent of the ex penses of the tutorial programme.   G/SCM/N/155/ISR 
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  To Whom the Subsidy is Provided 
 
 Enterprises with up to 100 employees in all sectors of the economy (including services) are 
eligible to apply.  Applications are submitted to  a regional project coordinator, who examines the 
enterprise.  If the coordinator determines that the enterprise is likely to gain from the programme, a 
tutor will be assigned to the project.    Actual Annual Expenditure  
  (In thousands of NIS)  2005: NIS 6,200  2006: NIS 5,700  2007: NIS 11,800 
 2008: NIS 14,000 
 2009: NIS 25,500  Duration 
  Ongoing.   
 
Trade Effects 
  The programme aids small- and medium-sized businesses to improve employment opportunities and wages, by the enhancement of their management. 
 
 Therefore, the programme has no trade effects.  Other information 
  The duration of the payment of the tutorial programme is between 6-12 months, but shall not 
exceed 150 hours of consultancy.   
 
2. Quality Management Programme (introduction to advanced managerial systems) 
The Authority Responsible for the Subsidy 
 
 The Finance Administration at the Mi nistry of Industry, Trade and Labour. 
 Legal Basis 
  Directives of the Director General of th e Ministry of Industry, Trade and Labour. 
 
Policy Objective and/or Purpose 
 
 The purpose of the programme is to assist me dium-sized manufacturers  to adopt innovative 
managerial systems.  This purpose is to be ach ieved by encouraging the use of advanced quality 
control technologies and/or the adoption of intern ational standardization processes of industrial 
quality management.  G/SCM/N/155/ISR 
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  Form of the Subsidy 
 
 Grants amounting to 50 per cent of the expe nses of the tutorial fees, up to a ceiling of 
400 hours of consultancy. 
 To Whom the Subsidy is Provided 
  The subsidy is provided to medium-sized ma nufacturers employing 50 to 500 employees.   
 
Actual Annual Expenditure  
  (In thousands of NIS)  2005: NIS 2,000 
 2006: NIS 1,353 
 2007: NIS 2,135  2008: NIS 1,936  2009: NIS 1,915  Duration 
  Ongoing.    Trade effects 
 
 The programme aids medium-sized businesses to adopt innovative managerial systems, 
therefore the programme has no trade effects.  
3. "Nitsos" Programme (Creative Management) 
The Authority Responsible for the Subsidy 
 
 The Finance Administration at the Mini stry of Industry, Trade and Labour.   
 Legal Basis 
  Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 
Policy Objective and/or Purpose 
 
 The purpose of the programme, initiated on 1 June  2000, is to foster and improve creative and 
innovative management.  
Form of the Subsidy 
 
 Grants amounting to up to 75 per cent of the expenses of the tutorial fees, up to a ceiling of 
250 hours of consultancy.  
To Whom the Subsidy is Provided 
 
 The subsidy is provided to manufacturers em ploying 10 to 250 employees, having a basic 
managerial system and willing to improve and invest in innovative and creative management. G/SCM/N/155/ISR 
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  Actual Annual Expenditure  
 
 (In thousands of NIS) 
 2005: (N.A.)  
 2006: NIS 1,013  2007: NIS 1,350  2008: NIS 906  2009: NIS 1,438 
 
Duration 
  Ongoing.    
Trade Effects 
 
 The programme aids small- and medium-si zed businesses to introduce innovative and creative 
management;  therefore the programme has no trade effects.    
4. The Industrial Design Tutoring Programme 
The Authority Responsible for the Subsidy 
 
 The Finance Administration at the Mini stry of Industry, Trade and Labour.   
 Legal Basis 
  Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 Policy Objective and/or Purpose 
 
 The purpose of the programme, initiated in 2004, is to increase awareness of the importance of 
industrial design and encourage industry to use the services of industrial designers.   
 Form of the Subsidy 
  Grants amounting to up to 75 per cent of the e xpenses of the tutorial design programme, up to 
a ceiling of 150 hours of consultancy.  
 To Whom the Subsidy is Provided 
  The subsidy is provided to manufacturers employing over 5 employees, who do not yet employ a designer and desire to develop innovative design. 
 
Actual Annual Expenditure  
  (In thousands of NIS)  2005: (N.A.) 
 2006: NIS 919 
 2007: NIS 686  2008: NIS 1,193  2009: NIS 1,004  G/SCM/N/155/ISR 
 G/SCM/N/186/ISR 
 G/SCM/N/220/ISR 
 Page 19 
  
  Duration 
 
 Ongoing. 
 
Trade Effects 
  It is not possible to estimate what, if any,  trade effects may result from the use of this 
programme.  
 
5. Training Courses for Adults 
The Authority Responsible for the Subsidy 
 
 Division of Training and Development of Human Resources, Ministry of Industry, Trade, and 
Labour. 
 Legal Basis 
  Criteria determined by an Inter-Ministerial committee.    
Policy Objective and/or Purpose 
 
 To provide vocational courses for unemployed and job-seekers and special groups such as 
single parents, minorities, people with disabilities and others who need a vocation in order to find a 
suitable job in the modern market.   
 
Form of the Subsidy 
  Courses and Workshops are financed by the Ministry of Industry, Trade and Labour.    To Whom the Subsidy is Provided 
  Daytime vocational courses for unemployed and job-seekers and special groups such as single 
parents, minorities, people with disabilities and others  who need a vocation in order to find a suitable 
job in the modern market.    
 The courses take place in vocational training institutes for a group of about 20 participants, 
generally unemployed.  At the end of the c ourse, the participants go through governmental 
examinations and get official certification from the Ministry.  Budget 
 
(thousands NIS) 
  2005:  92,400  2006:  77,300  2007:  66,400 
 2008:  48,600 
 2009:  62,300 G/SCM/N/155/ISR 
G/SCM/N/186/ISR G/SCM/N/220/ISR 
Page 20 
  
  Duration 
 
 Ongoing.   
 
Trade effects 
  It is not possible to estimate what, if any,  trade effects may result from the use of this 
programme.   
 
6. On the Job Training  
The Authority Responsible for the Subsidy 
 
 Division of Training and Development of Human Resources, Ministry of Industry, Trade, and 
Labour. 
 Legal Basis 
  Directives of the Director General of the Ministry of Industry, Trade and Labour.    
Policy Objective and/or Purpose 
 
 The purpose of the programme is to encourag e employers to hire new employees, despite 
their relatively low productivity rate dur ing the initial period of employment.   
 
Form of the Subsidy 
 
 A three month's  participation in the employee's salary.   
 To Whom the Subsidy is Provided 
 
 Any employer who hires persons registered as unemployed at the employment service and 
provides a training course approved by the Di vision of Training and Development of Human 
Resources.    Subsidy per Employee 
  2005 – 2009 up to NIS 1,300 per month.   Duration 
  Ongoing.   
 
Trade Effects 
  It is not possible to estimate what, if any,  trade effects may result from the use of this 
programme.   
 
Other Relevant Information 
  The subsidy is given during the first thre e working months of the new employee.    G/SCM/N/155/ISR 
 G/SCM/N/186/ISR 
 G/SCM/N/220/ISR 
 Page 21 
  
   The subsidy commences on the date on which the new employee begins working, but not 
earlier than the date of the application for the subsidy by the employer.    7. A Grant to Newly Released Soldiers who work in High Demand Jobs 
The Authority Responsible for the Subsidy 
 
 The National Insurance Institute.    
Legal Basis 
 
 The National Insurance Law - 1968.   Policy Objective and/or Purpose 
 
 The purpose of the programme is two-fold:    1. To motivate young people after the completion of  their compulsory military service, to accept 
employment rather than to rece ive unemployment benefits.   
2. To encourage mainly unskilled newly released so ldiers labour to join se ctors in which unskilled 
labour is in high demand, such as in indu stry, agriculture, cons truction and tourism. 
 Form of the Subsidy 
  Grant. 
 
Subsidy per Employee 
  2005:  NIS 7,379  2006:  NIS 7,578  2007:  NIS 7,578 
 2008:  NIS 8,114 
 2009:  NIS 8,487  Duration 
 
 Ongoing.   
 Trade Effects 
  Considering its limited application, low budge t and limited economic ef fect, this programme 
has no effect on trade. 
 
Other Relevant Information 
  The payment of the subsidy to the employee is made after he/she has completed six months of 
work in a high demand job. 
 
 The employee is entitled to the subsidy only  if he/she commences working not later than 
twelve months after his/her completion of compulsory military service.  G/SCM/N/155/ISR 
G/SCM/N/186/ISR G/SCM/N/220/ISR 
Page 22 
  
  V. OTHER FORMS OF SUBSIDIES 
1. Marketing Tutorial Program 
The Authority Responsible for the Subsidy 
 
 The Finance Administration, Ministry  of Industry, Trade and Labour.   
 
Legal basis  
 
 Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 
Policy Objective and/or Purpose 
 
 The purpose of the programme is to encour age exporters to adopt advanced marketing 
strategies, to use advanced marketing tools, to assi st them in building a marketing infrastructure and 
provide the necessary marketing training.    Form of the Subsidy 
 
 The program started in 2004.  The subsidy is in the form of grant amounting to 50 per cent of 
marketing tutorial fees, up to a ceiling of 200 hours.   To Whom the Subsidy is Provided 
 
 The subsidy is provided to exporting up to US$ 2,00,000, who needs tutorial assistance for 
building a marketing infrastructure.    
Budget/Expenditure:  (Actual annual disbursements (In thousands US$)) 
 
131 2005 
143 2006 
100 2007 
100 2008 
100 2009 
 
Duration 
 
Ongoing.   
 
Trade Effects  
  The amounts granted are small.  It was not po ssible to confirm the existence of a direct 
relation between the granting of this  aid and the trend in export.    G/SCM/N/155/ISR 
 G/SCM/N/186/ISR 
 G/SCM/N/220/ISR 
 Page 23 
  
  2. Consortia Program 
The Authority Responsible for the Subsidy 
 
 The Finance Administration, Ministry of Industry, Trade and Labour.   
 
Legal basis 
 
 Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 
Policy Objective and/or Purpose 
 
 Reducing the risks of small-volume exporters by  pooling their marketing activities abroad.   
 
Form of the Subsidy 
 
 The program started in 2005.  The subsidy is in the form of conditional grant amounting to 50 per cent of pre-approved expenditures.  A consor tium is comprised of a minimum of 5 companies 
and each year the consortium's business plan as we ll as a request for the same year expenses is 
submitted to the committee supervising the program .  The lifespan of each consortium is up to 
36 months.   Royalties are required to be paid by companies participating in the program.    To Whom the Subsidy is Provided 
  The subsidy is provided to companies of all sectors with a revenue not exceeding 
30 million US$.  Each consortium is subject to the approval of committee supervising the program 
and must operate in certain designated fields.  
 Budget/Expenditure:  (Estimated actual annual disbursements (In thousands US$)) 
 
3,230 2005 - 2007 
1,885 2008 
1,857 2009 
 
Duration  
 
Ongoing.   
 
Trade Effects 
 
 The amounts granted are small.  It was not po ssible to confirm the existence of a direct 
relation between the granting of this  aid and the trend in export.   
 G/SCM/N/155/ISR 
G/SCM/N/186/ISR G/SCM/N/220/ISR 
Page 24 
  
  3. Development of Marketing to World Markets Fund (Since 2006, "The Exporter's 
Assistance Fund") 
The Authority Responsible for the Subsidy 
 
 The Finance Administration, Ministry  of Industry, Trade and Labour.   
 
Legal basis 
 
 Directives of the Director General of the Ministry of Industry, Trade and Labour.   
 
Policy Objective and/or Purpose 
 
 The purpose of the programme is to allevi ate credit shortage and assist owners and 
entrepreneurs of small businesses by reducing re quirements of material securities necessary for 
obtaining loans.  Form of the Subsidy 
  The program, which started in 2006, provides state loan guarantees to small businesses.  The credit limit for a single business is up to NIS 500,000.  The loan guarantee is limited to 70 per cent of 
the approved loan.  The loan guarantee is given for a period of up to five years for loans provided by a 
bank designated by MOITAL.  A loan is given up on the approval of the company's business plan.   
 To Whom the Subsidy is Provided 
  The support is provided to small exporters in all sectors facing difficulties in obtaining credit.   
 Budget/Expenditure:  (Estimated amounts deposited as the loans guarantees (In thousands US$)) 
 
5,428 
5,428 
5,428 5,4282006 
2007 
2008 2009 
 
Duration 
 
Ongoing.   
 
Trade Effects  
  The loans guaranteed by this program are insi gnificant so that we are unable to confirm the 
existence of a direct relation between the gran ting of this aid and the trend in export.  
  G/SCM/N/155/ISR 
 G/SCM/N/186/ISR 
 G/SCM/N/220/ISR 
 Page 25 
  
  4. "200 X 2" – "Two Hundred Times Two" 
The Authority Responsible for the Subsidy 
 
 Foreign Trade Administration, Ministry of Industry, Trade and Labour.   
 Legal basis 
  Directives of the Director General of the Ministry of Industry, Trade and Labour.    Policy Objective and/or Purpose 
 
 The purpose of the programme is to encour age exporters to adopt advanced marketing 
strategies, to use advanced marketing tools, to assi st them in building a marketing infrastructure and 
provide the necessary marketing training.    
Form of the Subsidy  
 
 The program started in 2008.  The subsidy is in the form of grant amounting to 60-75 per cent 
of the approved infrastructural marketing expe nditure and up to a ceiling of each section in 
accordance with the dedicated bus iness plan.  Infrastructural marketing expenditures refer to 
marketing activities which do not include current expe nditure linked to the export activity nor to the 
volume of goods exported but rather support for part icipating in trade fairs and professional seminars, 
market studies and consultancy for the preparati on of business plans, preparation of catalogues, 
marketing training etc.  
 
 A strategic dedicated marketing plan is de veloped for each company.  Each company is 
accompanied by a program manager.    To Whom the Subsidy is Provided 
  The subsidy is provided only to companies in peripheries areas of the country, in all sectors, 
intending to build and/or strengthen their marketing infrastructure abroad.  
 
Budget/Expenditure:  (Actual annual disbursements (in thousands US$)) 
 
244 2009 
 
Duration 
  Ongoing.   
 
Trade Effects 
 
 The amounts granted are small.  It was not po ssible to confirm the existence of a direct 
relation between the granting of th is aid and the trend in export. 
  G/SCM/N/155/ISR 
G/SCM/N/186/ISR G/SCM/N/220/ISR 
Page 26 
  
  5. Employment Grant Program 
The Authority Responsible for the Subsidy 
 
 Israel Investment Center (IIC) at the Ministry of Industry, Trade and Labour.   
 Legal basis 
  Government decision.   
 
Policy Objective and/or Purpose 
 
 Increase employment in the peripherals areas of Israel as well as within specific populations with high rates of unemployment.   
 
Form of the Subsidy 
  The support given under this programme is in th e form of grants to companies for wages to 
employees in two tracks as follows:    
1. General population in the peripheral areas: an av erage support of 7.5 per cent-20 per cent of the 
monthly salary cost for a period of 30 months, subject to the company's size and location. 
2. For specific populations throughout the county - Ultra-orthodox, Arab, Dr uze, Circassian and 
disadvantage workers: an average support of 25 pe r cent of the monthly salary cost for a period 
30 months. 
 
To Whom the Subsidy is Provided 
  Subsidies under this programme are provi ded to companies establishing or expanding 
industrial plants, telephone call centers, computer service support centers or logistic centers and 
subject to conditions as described above.  In order to be eligible for this program these companies 
have to employ a minimum number of workers. 
 Budget/Expenditure:  (Actual annual disbursements (In thousands US$)) 
 
2005 73,003 
2006 16,112 
2007 16,763 
2008 14,729 
2009 13,789 
 
Duration 
  Ongoing.   
 
Trade Effects 
  The programme aids businesses in peripherals areas of the country by the supporting wages to 
employees, therefore, the programme has no trade effects.   G/SCM/N/155/ISR 
 G/SCM/N/186/ISR 
 G/SCM/N/220/ISR 
 Page 27 
  
  6. Investment Incentives in the Law for the Encouragement of Capital  Investment 
The Authority Responsible for the Subsidy 
 
 Israel Investment Center (IIC) at the Ministry of Industry, Trade and Labour.   
 Legal basis 
  The Law for the Encouragement of  Capital Investment - 1959.   
 
Policy Objective and/or Purpose 
 
 The purpose of this program is to encourag e both local and foreign capital investments and 
commercial entrepreneurship particularly innova tion and economic activities in disadvantaged areas. 
 
Form of the Subsidy 
  The support given under this programme is in th e form of grants and/or reduced rates of 
taxation.  
 Grants of up to 24 per cent of the approved capital investment are given to approved 
enterprises located in disadvantaged areas.  To Whom the Subsidy is provided 
 
 Subsidies under this programme are provided to globally competitive industrial companies, as 
well as companies in tourism and real estate sectors.  Budget/Expenditure:  (Actual annual disbursements (in thousands US$)) 
 
 2005:  188,502 
 2006:  141,472 
 2007:  190,927  2008:  244,258  2009:  157,817  
Duration 
 
 Ongoing.    Trade Effects 
 
 The specific assistance under this programme  is granted to enterprises located in 
disadvantaged areas, in order to offset local inv estment disadvantages and raise the levels of income 
and employment in structurally weak areas.     Therefore the programme is neutral in terms of competition and has no effect on competition 
in international trade. 
 G/SCM/N/155/ISR 
G/SCM/N/186/ISR G/SCM/N/220/ISR 
Page 28 
  
  7. Fund for Labour Intensive Enterp rises in Financial Distress   
The Authority Responsible for the Subsidy 
 
 The Ministry of Industry, Trade and Labour and the General Accountant at the Ministry of 
Finance.  Legal Basis 
 
 Government decision.   
 Policy Objective and/or Purpose 
  The purpose of the programme, initiated at the be ginning of 2002, is to maintain employment 
in disadvantaged areas.  The program has not been funded since 2006. 
 Form of the Subsidy 
  Government loan for an amount equivalent to  the financing from other sources (such as bank 
loans) up to a ceiling of NIS 10 million.  The loan is linked to the cost of living index and bears an 
interest rate equal to the cost of  borrowing by the Government.   
 To Whom the Subsidy is Provided 
  The subsidy under this programme is provided to  enterprises with financial difficulties, with 
good possibilities of recovery, employing at least 70 employees or at least 1 per cent of the workforce 
in the area, and located in so cio-economic disadvantaged areas. 
 Fund Budget 
  (In millions NIS) 
 2005: 11.5 
 Duration 
  Terminated in 2006.   
 
Trade Effects 
  In light of the scope and nature of the assistan ce, it is not possible to determine what, if any, 
trade effects may result from this programme.  8. Cost of Land Development 
The Authority Responsible for the Subsidy 
 
 Ministry of Trade and Industry, Trade and Labour.    
Legal Basis 
 
 Directives of the Director-General of the Ministry of Industry, Trade and Labour.    G/SCM/N/155/ISR 
 G/SCM/N/186/ISR 
 G/SCM/N/220/ISR 
 Page 29 
  
  Policy Objective and/or Purpose 
 
 Participation in the cost of land development in  industrial areas in  the disadvantaged regions 
in accordance with the Law of Encouragement of Investment Capital as a means of encouraging 
enterprises to locate in those areas.  Land developm ent includes dirt work, access roads, sewers, lights 
and phone lines and water pipes.  To Whom the Subsidy is Provided  
  New enterprises, upon receipt of approval from the authority responsible for the subsidy, 
establishing their industries in the disadvantag ed regions in accordance with the Law of 
Encouragement of Investment Capital.    
Form of Subsidy 
 
 Participation in the cost of land development up to 70 per cent of the cost depending on the 
particular part of the country in which the de velopment takes place.  As of 1 January 2004, 
participation of 30 per cent in the cost of la nd development, up to a ceiling of NIS 50,000. 
 
 As of 2007, participation in the cost of  land development varies from 40 per cent up to 
85 per cent, according to several parameters, mainly  the distance from the central part of Israel, 
social-economic rating of the municipality and others.  
 Budget/Expenditure  
  (In millions Israeli shekels)   2005:  NIS 49  2006:  NIS 52  2007:  NIS 54.4 
 2008:  NIS 83.3 
 2009:  NIS 122  Duration 
 
 Ongoing.   
 Trade Effects 
  The programme provides for the participation of  the Government in the development of basic 
infrastructure (land development), therefore the programme has no trade effects.  
 
9. Eilat Free Trade Zone 
The Authority Responsible for the Subsidy 
 
 The Ministry of Finance.   
 
Legal Basis 
  Eilat Free Trade Zone Law - 1985.   G/SCM/N/155/ISR 
G/SCM/N/186/ISR G/SCM/N/220/ISR 
Page 30 
  
  Purpose of the programme 
 
 The purpose of the programme is to encourage the development of the city of Eilat, located at 
Israel's most Southern border. 
 Form of the Subsidy  
  Several types of tax concessions: 
 
 Most products (imported or domestically pr oduced) purchased in Eilat are exempt from 
value-added tax.  This tax benefit is available to Eilat residents and companies, for products consumed 
in Eilat.   
 Employers receive tax refunds for employees of up to 20 per cent of gross wages paid to 
employees.  To Whom the Subsidy is Provided  
  The tax concessions are granted to Eilat r esidents and companies located in Eilat.  
 
Budget/Expenditure 
  Data not available.    
Trade Effects 
 
 All fiscal advantages under this programme are not contingent upon export.  It is not possible 
to estimate what, if any, trade effects may result from the use of this programme.  
10. Free Port Zone 
Authority Responsible for the Subsidy 
 
 Ministry of Finance and Ministry of Transportation.    Legal Basis 
  Free Port Zone Law - 1969.    Purpose of the programme 
  The objective is to promote the development of the port city of Eilat at Israel's most Southern 
border. 
 To Whom the Subsidy Is Granted 
  Enterprises located in the Free Port Zone of Eilat.   
 
Form of the Subsidy  
  Various forms of tax incentives including, inter alia:  G/SCM/N/155/ISR 
 G/SCM/N/186/ISR 
 G/SCM/N/220/ISR 
 Page 31 
  
  (1) Enterprises in zone A (like Eilat) are entitled to a temporary exemption from income taxes for 
ten years, with an option for an extension of 5 years under certain conditions;   
 
(2) a tax of 15 per cent  on dividends paid out of the above income with no stipulated time limit; 
 (3) no capital gains tax on inflationary gains, a nd no capital tax to foreign shareholders on selling 
their share in the enterprise, when the shares are purchased in foreign currency (according to 
the conditions in low).   
 
Budget/Expenditure 
  Data not available.    
Trade Effects 
 
 Fiscal advantages under this programme are not c ontingent upon export.  It is not possible to 
estimate what, if any, trade effects may result from the use of this programme.   
  
__________