Intel to invest $6bn in Israel with 5% tax rate; To increase 10,000 payroll
By Michael Hennigan, Finfacts founder and editor
Sep 22, 2014 - 2:12 PM

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Israel announced on Monday that Intel, the US chip giant, will invest $6bn in the upgrade of its main manufacturing plant in what will be the biggest single investment by a foreign company in the country. The company will receive a grant of $300m over five years and will pay a corporate tax rate of only 5% for a 10-year period, the ministries said. Israel employs about 10,000 in Israel and it will hire an additional 1,000 workers at the plant in the southern town of Kiryat Gat by 2023, in addition to the 2,500 that already work there.

"Intel's investment is a strategic asset for Israel's industry," Yair Lapid, finance minister, said in a statement. "This is the biggest investment by a foreign company ever in Israel and is further proof that Israel is at the forefront of technology and innovation."

Reuters reports that Intel submitted the investment plan in May and it is widely believed to be aimed at shifting to new 10 nanometer technology.

The finance ministry said the plant would be the most advanced chip facility in the world.

Intel had said in January that it would decide on the location of a 10 nanometer plant this year. Israel was one of a number of countries competing to host the new plant.

Intel Israel's exports totaled $35bn in the past 40 years and $3.8bn in 2013.

At end 2013, Intel Israel had 4,400 employees at its fab and 5,400 at its development center - - Intel Ireland in contrast is not engaged in significant R&D.

Intel is Israel's biggest exporter to China and Intel Ireland is likely Ireland's.

Intel 25 years in Ireland: Employs 2,800 not 4,500

The Jerusalem Post said in 2013 that creating incentives for foreign investment has been the subject of some controversy in Israel, which like many countries offer companies tax incentives for large capital investments, especially in high-priority areas such as the periphery. As a result, many of the biggest companies operating in Israel pay a very low tax bill.

In 2010, for example, the government paid out NIS 5.6bn in tax credits for capital investments, 70% of which went to just four companies. Among them: Teva Pharmaceutical Industries, Check Point Software Technologies, Israel Chemicals and Intel. Although the corporate tax rate was 25%, they paid an average of 3% tax.

Last March Intel announced that it had invested $5bn in recent years at its Irish campus at Leixlip, County Kildare.

Last April Bloomberg News reported that Citigroup cut Costa Rica’s growth forecast after Bank of America and Intel said they would fire 3,000 workers in the small Central American nation following the opposition's victory in a presidential runoff.

Intel is cutting 1,500 out of 2,500 jobs in the country as part of an effort to consolidate some operations in Asia, spokesman Chuck Mulloy said.

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