Finance Minister Bezalel Smotrich told the Knesset plenum on Wednesday that he will present a support package for Israel’s high-tech sector next week, following the shekel’s sharp strengthening. He also said the Finance Ministry is examining whether multinational companies could be allowed to pay taxes in dollars on certain types of income.
Smotrich said officials now view a strong shekel environment as the “new normal” for the Israeli economy. “We are happy about the strong shekel,” he said. “The problem is the pace, the very fast pace, because in the end systems need time to adjust.”
The plan will include two kinds of measures. The first is immediate aid for small startups through grants, with expanded bridge-grant tracks at the Israel Innovation Authority. He said the main issue for these firms is runway, explaining that a startup that raised $20 million and expected it to last a year may now only have about eight months and cannot always raise fresh money in time. The ministry is also considering extending support to growth companies that face cash-burn and funding gaps.
Smotrich said the bigger challenge is multinational companies operating in Israel. He was less worried about layoffs, saying the labor market is tight and workers will be absorbed elsewhere or start companies of their own. What concerns him more, he said, are decisions by boards abroad to move activity or place new R&D centers outside Israel because labor-cost gaps with expensive U.S. locations, such as Silicon Valley and Florida, are narrowing. He said the ministry is examining three alternative models to incentivize foreign multinationals to expand in Israel and shrink elsewhere. On the dollar tax idea, he said it would be exceptional and that, to his knowledge, no country allows it, since tax payment is usually made in local currency.
