Smotrich Says Tax Relief Plan for Tech Is Nearing Completion

Finance Minister Bezalel Smotrich said in the Knesset on Wednesday that the Finance Ministry will publish a package of aid measures for Israel’s high-tech sector in the coming days to help it cope with the strong shekel. He also confirmed a report that the government is close to approving partial corporate tax payments in dollars for multinational companies.

The plan under discussion would also support startups of all sizes, including more mature growth companies, through existing Israel Innovation Authority mechanisms that begin as grants and can turn into loans if a company grows and starts generating revenue and profit. Smotrich said the government is also examining incentives for multinational firms to expand their presence in Israel. He said, “We want to formulate two packages, one of which will provide an immediate response, mainly for small startups.”

Smotrich said he has instructed officials to meet with all 450 multinational companies operating in Israel and with investment funds. He said the ministry is considering whether certain types of income can be taxed in dollars, though “no country in the world allows this” and tax payments are normally made in local currency. The idea would let the state use the dollar proceeds to service dollar debt, avoiding conversion into shekels and reducing upward pressure on the currency. Similar arrangements were already used in the tax treatment of the Wiz and Armis exits, which sold for $32 billion and nearly $8 billion, respectively.

The ministry began advancing the plan after the shekel strengthened sharply and briefly fell below 2.9 to the dollar. Even after the dollar recently recovered to nearly 3 shekels, the exchange rate remains historically low and continues to hurt exporters and tech firms. At a June Zoom meeting with industry leaders, officials heard warnings about layoffs and falling profitability, and WIX’s 1,000-job cut was cited as a leading example. eToro executive vice chair Hadva Bar said last week that without major action, Israel could see 25% to 30% of tech workers laid off within six months to a year.

Smotrich argued the shekel’s strength reflects a real shift in Israel’s economy and heavy foreign investment, not speculation, and said the problem is the speed of the move rather than the level itself. Avi Traub of the Israeli High-Tech Association warned that the biggest risk now is delay, especially if the Knesset is dissolved and no new legislation can pass, adding that the proposed measures are technically simple to implement.