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International Agreements

Following is a list of several economic international agreements Israel is signed on, divided by type of agreement.

Note: This page contains only major economic agreements related to or under the supervision of the Ministry of Finance. A complete list of Israel's Bilateral Agreements and International Agreements is available in the Ministry of Foreign Affairs website.

Avoidance of Double Taxation Treaties

Treaties for the avoidance of double taxation are bilateral agreements in the context of which the contracting states establish the taxation rules that will apply to income and assets that are connected to the two states. These rules are in addition to the taxation rules that apply in accordance with the relevant internal law - the tax laws of each one of the states. A treaty for the avoidance of double taxation has advantage over domestic law, because if the treaty's provisions are more lenient than those of the internal law, the treaty's provisions will apply. If the treaty's provisions are more stringent than the internal law, which may be the case with respect to older treaties, the internal law will apply. Thus, the treaty provisions can only serve to provide greater leniency. Treaties resolve the dual taxation problems between the two states in one of two ways:

  • By granting the exclusive right of taxation to only one state, or
  • By stipulating that one state - generally, the source state in which the income was derived - will have the "primary right of taxation". The other state - the state of residence of the party deriving the income - will have the "right to residual taxation" and will be entitled to tax the income, but will be required to avoid double taxation by granting a credit for the tax paid in the state having the primary right of taxation.
Most tax treaties throughout the world are based on one of the main models used in this area, or a combination of the two: The OECD model tax treaty serves as the basis for the text of Israel's tax treaties, after adjustment to Israel's internal law, its special conditions and its tax treaty policy.

List of Israel's double taxation treaties

For additional information, please contact:

Rebecca Lapiner, C.P.A
Senior deputy of the General Director
State Revenue Administration
Ministry of Finance
Israel
rebeccala@mof.gov.il

Bilateral Investment Treaties (BIT)

Israel provides a legal framework for protecting Israeli private overseas investments through a global network of Bilateral Treaties for the Reciprocal Promotion and Protection of Foreign Investments which express the signatories' commitment to the promotion of bilateral investment.

Investment Agreements are intended to protect and encourage investment by reducing political risks associated with the investment climate in foreign markets. The agreement guarantees the repatriation of both initial investment and returns in case of nationalizations, expropriations, and damages resulting from armed conflict, and provides foreign investors with treatment equitable to that received by local, and third party, investors. Furthermore, the agreement assures the free transferability of investment related funds convertible at market exchange rates. The agreements' significance stems from the arbitration clause which commits national governments to unconditional international arbitration in case of disputes with private investors. Disputes are to be brought before ICSID- the International Centre for Settlement of Investment Disputes, an organization dedicated to the resolution of legal disputes, operating as part of the World Bank Group.

Israel's BIT Background

Israel's strategy of globalization and liberalization led to a process of specialization and increased efficiency in which uncompetitive industries were relocated to emerging markets, allowing the economy to focus on its core sectors. Furthermore, Foreign Exchange liberalization enabled Israeli enterprises to invest in, and establish subsidiaries abroad, in both the manufacturing and services sectors. These reforms, implemented in the 1990's and early 2000's, including liberalization, deregulation and global integration, increased the Israeli economy's growth rate, consequentially, causing a substantial increase in the stock of Israeli outward investment. Israel views its Bilateral Investment Protection Agreements, along with its Double Taxation and Free Trade Agreements, as a prime tool for the achievement of economic growth via integration with global real and financial markets.

Israel negotiates Bilateral Investment Treaties on the basis of a model text from 2003 which replaced the model text from 1994. For further information:

For additional information, please contact:

Mr. Boaz Fleischman
International Affairs Department
Ministry of Finance
Israel
boazf@mof.gov.il

Agreements:

Free Trade Area (FTA) Agreements and Qualified Industrial Zones (QIZ) Agreements

Israel's Free Trade Area (TFA) and Qualified Industrial Zones (QIZ) agreements are signed by the Foreign Trade Administration in the Ministry of Industry, Trade and Labor.

The responsibilities of the Bilateral Division in the Foreign Trade Administration include:
  • Conducting feasibility studies of new Free Trade Area Agreements (FTAs) and assistance in the determination of trade policy.
  • Maintaining and updating existing trade agreements.
  • Initiating and managing trade agreements' negotiations of all types – FTA, standardization, services, government procurement, etc.
  • Addressing problems relating to trade barriers and other trade issues.
  • Maintaining trade relations and addressing various industrial cooperation issues with the institutions of the European Commission.

See more:

Free Trade Area (FTA) Agreements

Information on each agreement can be found in the Bilateral Agreements Division in Foreign Trade Administration website in the Ministry of Industry, Trade and Labor.

  • Canada
  • Colombia (Yet to be ratified)
  • European Free Trade Association (EFTA)
  • European Union (EU)
  • India
    Under negotiations
  • Mercosur (Southern Common Market)
  • Mexico
  • Turkey
  • United States of America (USA)

Qualified Industrial Zones (QIZ) Agreements

Information on each agreement can be found in the Bilateral Agreements Division in Foreign Trade Administration website in the Ministry of Industry, Trade and Labor.

  • Egypt
  • Jordan
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