The Israeli tax authority has been investigating the possibility of creating a haven for foreign patent registering companies that could catapult the country into competition with Switzerland for the valuable revenue, Haaretz reports.
Currently, the Encouragement of Capital Investments Law offers tax benefits to exporting companies on revenues from intellectual property developed in Israel, as well as from sales of products and services. Under consideration now at the Finance Ministry is a proposal to include royalty income derived from patents developed abroad, as well.
In recent years, Switzerland became the main address for companies around the world with intellectual property, as a result of its substantial tax benefits on royalty income.
Some of those companies subsequently decided to headquarter in Switzerland, and that has in turn led to hefty investments there in research and development.
Many Israeli companies want the tax benefits applied to their royalty earnings from patents developed abroad, as in Switzerland, and the Finance Ministry is considering a version of the Swiss model.