All companies in Israel must register with The Registrar of Companies (Ministry of Justice) and the Tax Authorities (Ministry of Finance).
While Hebrew and Arabic are the official languages of Israel, in practice, corporate documents in English will generally be accepted by the Registrar. However the Company Registrar does require that the Articles of Association be translated into Hebrew as well.
To register a business as a company with the Companies Registrar, the following documents must be submitted:
1. Form No.1 of the Companies Registrar – an application form to register a company.
2. Memorandum of Association, which establishes the corporate identity and principal objectives of the company, shareholders' responsibility and shares issued.
3. Articles of Association, which set forth rules of conduct for the company. Should a company not submit its own Articles of Association, then the standard articles which are listed in the Companies Ordinance will be in force for this company.
4. The fee for registering a company is currently NIS 2,244.
After registration is complete, the Registrar will issue the company with a Certificate of Incorporation and a company number (of 9 digits).
An Israeli lawyer is required to verify the company documents. Usually a lawyer will handle the process for most requests and represent the company at the Companies Registrar’s office as well.
Once the company has been registered with the Registrar, it must be registered with the appropriate Tax Authorities.
Registration as a company should be made at the Tax Authority upon commencement of operations. The filing number is usually the same one as the one issued by the Companies Registrar. Registration is made using Form 4436, which includes basic details of the company.
Note: According to the World’s Bank Doing Business project, which provides objective measures of business regulations and their enforcement across 181 economies, Israel ranks in 24th place in the “Starting a Business” category.
The Doing Business table summarizes the procedures and costs
associated with setting up a business in Israel.
Monthly and Annual Tax Filings
The Israeli tax year is generally the calendar year. Subsidiaries of foreign public companies may sometimes use a different fiscal year.
All companies doing business in Israel are required to file audited annual tax returns and financial statements within five months after their fiscal year. Extensions may be obtained. Filings may sometimes be spread over a period of up to 13 months after the tax year end.
Companies must also file monthly returns on account accompanied by tax payments. Bi-monthly returns are sometimes acceptable for small businesses.
Taxes to be filed include:
· Company tax installments - a percentage of the company's monthly sales revenue.
· Supplementary company tax installments with respect to certain non-deductible expenses.
· Tax withheld from salaries and remittances to suppliers when applicable.
· Value-added tax (VAT).
· National Insurance.
These filings and payments must be made by the 15th day after the month's end and can be paid at a bank or post office. Late payments of even a few days incur a computer generated penalty.
Regulations require detailed bookkeeping and invoice requirements for income tax and VAT. Accounting records must be available for inspection in Israel by tax officials.
For a map location and contact details of the field offices of the Israel Tax Authority (Customs and VAT), please click here
Printing Tax Receipts and Stationery
Once you obtain a VAT registration number, you should print invoices and receipts that display that number appropriately.
At the same time, it's a good idea to order the stationery you require: letterheads, envelopes, business cards and the like.
Receiving a Business License
There is a list of the types of business that have “licensing requirement” status, meaning businesses that need a license to operate under the Business Licensing Law.
Many commercial enterprises and professionals must have business permits in order to operate. Permits are usually issued by the municipalities after prior approval by other government departments such as the Ministry of Health. Permits must be renewed annually.
Application forms are usually available from the municipal licensing authority. It is necessary to prepare and file detailed drawings of the premises. Contact your local municipality or local council for detailed information.
Procedures and directives setting out all that needs to be done to receive a business license can be obtained on the Israel Police website (in Hebrew).
Make sure that local regulations do not prohibit your opening a business at the designated site.
Opening a Business Bank Account
It is necessary to open a commercial bank account through which all company finances will be conducted. When you open the account, you are obligated to present copies of the company’s Articles and Registration Certificate, approved by an accountant or an attorney, as well as an accountant or attorney’s approval of signatory rights for the company.
Apply to the Municipality to find out what are the municipal taxes relevant to your business. These taxes are paid by the end-user and not the owner. Vacant property has a one-time 6 month exemption from municipal taxes.
End users pay rates which vary depending on the region, type and size of the business property involved.