Resident and Non-resident Companies
Israeli resident companies are subject to tax on worldwide profits and gains, with credit granted for overseas taxes in certain countries. A non-resident company is subject to tax only on Israeli-source profits, which includes, inter alia, income deriving from a permanent Israeli establishment or income accrued and produced in Israel.
Since January 2016, the corporate income tax in Israel is 25% (a 1.5% decrease from its former rate). It is important to note that certain companies are eligible to lower corporate income tax rates. For example, Special Priority Enterprises and Priority Enterprises benefit from a lower corporate income tax rate ranging from 5% to 16% (depending on their exact location and definition by the Israeli Law for the Encouragement of Capital Investment).