Startup city

Tel Aviv seeks to draw global tech firms with tax breaks

Some 73 international R&D centers have already set up shop in the White City, contributing knowledge and jobs to the ecosystem

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

Illustrative view of Tel Aviv at night, August 29, 2016. (Miriam Alster/Flash90)
Illustrative view of Tel Aviv at night, August 29, 2016. (Miriam Alster/Flash90)

Tel Aviv, Israel’s city that never sleeps, is looking to draw a greater number of international corporations to set up research and development facilities in the seaside metropolis.

The city has already doubled the amount of international R&D centers in its fold over the past five years, with companies like Visa, Renault, Bosch and Google having set up local R&D facilities.

Now, the city’s international economic development unit, Tel Aviv Global, has set out a plan to attract even more “big names” to the city next year, with a new municipal policy offering city-tax breaks and what the municipality calls a “red carpet” package that will assist entrepreneurs in setting up their international activity in the city.

“We understand that for our high-tech sector to grow, it must open the market to foreign talent,” said Eytan Schwartz, CEO of Tel Aviv Global. “Tel Aviv Global is working with our governmental partners on continuing the process of attracting international R&D centers; opening international accelerators; encouraging foreign entrepreneurs to work in the city and promoting the activity of global corporations with an emphasis on Chinese companies.”

Already today, some 73-international research and development centers provide over 6,200 jobs locally, and introduce new capital and knowledge to the city’s tech ecosystem, shows a report compiled by Tel Aviv Global and IVC Research Center, which tracks the high-tech industry. This represents one-fifth of all of the R&D centers in Israel.

In addition, Tel Aviv is home to some 2,000 high-tech companies, which constitute about a quarter of the total high-tech companies in Israel. One out of every 10 jobs in the city is in the high-tech sector, the report shows.

The rate of growth in the number of high-tech companies in Tel Aviv-Yafo — as the city is officially called — is higher than that of Israel and is particularly higher in terms of employees: the rate of growth in the number of startup employees in Tel Aviv-Yafo is double that of Israel (66 percent and 36%, respectively)

As of 2016, Tel Aviv-Yafo was home to almost half of all Israeli high-tech companies and 40% of all International R&D centers in Tel Aviv and its surrounding cities (defined as greater Tel Aviv), the data shows.

The Tel-Aviv-Yafo municipality has already implemented a strategy to draw Israeli tech firms into its fold: it has reduced the level of taxes paid by early-age startups; has opened a number of co-working spaces for entrepreneurs; has begun practicing an open data policy and allowing technological pilots in the public space through a special municipal startup committee; has connected the city with free WiFi and supports tech-related conferences and events, the municipality said in a statement.

The city’s Municipal Innovation and Entrepreneurship Center, or the Platform as it is known, is one of a few locations in Israel in which international tech workers can gain 24-month-long working visas, the statement said.

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