The Israeli cabinet voted unanimously to approve a reduction of 1.5% in Israel’s corporate income tax rate, from 26.5% to 25%, starting January 1, 2016.
The measure has already been moved onto its first reading and should be approved by the plenum in its second and third readings by the end of the month. The cut will then come into effect on January 1 2016.
The Ministry of Finance said, "The company tax reduction aims to work towards strengthening and encouraging growth in Israeli industry and enhancing the competiveness and attractiveness of the Israeli economy in markets worldwide and provide incentives for investment in domestic manufacturing."
The Ministry of Finance added that the cut follows a surplus in tax collection. The cut in company tax follows a cut in VAT from 18% to 17%, which came into effect on October 1. These measures seek to speed up growth in the economy, with annual growth having slowed to less than 3%.