Infrastructure projects: great business opportunities

The State of Israel’s total investment will reach more than 200 billion NIS by the end of 2020, and the set budget for the next five years projects has been approved and doubled. This budget aimed at international companies, Invites them to participate in the implementation of infrastructure projects in a wide range of fields.

 Every major and significant infrastructure project involves hundreds and sometimes thousands of companies from different fields. For example, one of the most recent projects that Auren Israel’s advisory team is undertaking is to excavate transport tunnels to Jerusalem for the benefit of roads and railways. We professionally accompany dozens of companies ranging from small international companies to large global companies, with each company executing its area of expertise in the project. Starting with electricity, sealing, digging, clean air, communication, a variety of technologies, etc.

In some of the acquaintances, the international companies participating are the direct winners of the state tenders, and in some of these acquaintances, the sub-suppliers.

The experts’ team of Auren Israel has extensive experience in accompanying infrastructure projects. Starting with the preparation for the tender, winning, and the ongoing support of the business activity, alongside with the achievement of the ultimate goal: bringing the profit back home. All of these services under one umbrella in one place provided by a personal, professional team.

The major projects in Israel usually offered to the public for participation in the PPP – “Public-Private Partnership” method. A method for carrying out public projects through a partnership of the public sector with the private sector. It is a contract between a government office and a private business entity, for a common purpose. The advantage of this method is that the initial cost, which is often very high, is borne by the business entity, which will eventually earn its money back from it, over time, without the extremely high cost of financing being imposed on the public.

The three common models used in Israel are:

PFI – “Private Finance Initiative”: The franchisee who sets up and operates the project receives payments mainly from the state, according to pre-defined performance criteria.

BOT – “Build, Operate, Transfer”: Build, operate, and transfer. In this method, at the end of the period, the property passes to the client, the public sector. The franchisee who runs the project receives payments mainly from the users of the service.

BOO – “Build, Operate, Own”: Construction, operation, and ownership – at the end of the agreement period, the property remains owned by the private sector.

The verity and range of projects are wide and its includes projects in these areas of expertise: Roads, Tunnels, Railways, Electricity and Energy, Environmental Health, Recycling, Clean Air, Clean Energy, Water Purification, Air Purification, Chemical Purification, Communication, Telephony, Internet, Satellite, Agriculture, Real Estate, Green Construction, Hotels, and Tourism Infrastructure.

We are at your disposal!

Mr. Ofir Angel

Chairman of AUREN Israel
ofir.angel@auren.co.il 

Business Generator, Technologies, Strategy, and International Taxation

ZOOM Workshop: Management Tools and Methods to Overcome Uncertain Business Situations

 

אתר AUREN שעון לבן על שולחן עט וגליונות נייר

Photo by freestocks on Unsplash

 

26/5/2020 20:00-21:30

Auren Israel would like to invite you to a fascinating ZOOM meeting with Dan Cristal, Head of Human Capital Development and Organizational Learning hosted by the north mechanical engineering forum.
Engineer Managers this meeting is for you.

About the event:
We will have a discussion about the management challenges and adjustments that managers have to face in their new post coronavirus daily routines. The discussion will include challenges brought up by the participants of the event, alongside management dilemmas that rise-up during conversations with managers from various companies in Israel and from around the world. We will also provide you with optional tools and practical, proven, and systematic solutions.

Information about the event and registration: https://www.eventbrite.com/e/105452557438

Webinar: Business flexibility under uncertain conditions (in Hebrew)

TTM Webinar – Fast response to a changing reality market

auren A truck leaves the warehouse. מקור משאית יוצאת ממחסן

 

Auren Israel, in collaboration with the Manufacturers Association, invites you to participate in a Webinar: Speed Response to the Market in a Changing Reality, through Zoom on Monday 11/5 at 11:00, with Chen Benedek, Director of Excellence in Operations and Supply Chain at Auren Israel. In the session, we will introduce the concept of TTM, its effects, and components on the operational aspect of the organization and its importance as a differentiation strategy, as well as practical tools for preserving and improving TTM and preparing the organization for challenges.

Hebrew-language Webinar

Click here to register

Zoom online
Dated 11/05/2020

 

The Registration of a Fiscal Representative Office in Israel

A fiscal representative office or establishment of an Israeli company?
What does it mean?

The registration and operation of a fiscal representative office; should be registered by a local representative.

The fiscal representative is responsible for the management of the company’s legal and financial affairs in Israel; including all tax-related issues.

The Advantages:

There are several major advantages to a fiscal representative office registration over the establishment of an Israeli company.  

Management and tax-related aspects compared to an Israeli company (a daughter company):

The company’s business and tax-related activities are managed in resemblance to the way Israeli companies are been managed.

When an Israeli daughter company decides to shut down its business activity, the process might be long and challenging. On the other hand, the procedure of shutting down a business activity of a fiscal representative office is an expeditious procedure, which requires only to finalize and to report tax debts. 

Marketing and PR (Public Relation) reasons:

Marketing and PR (Public relationships) might be the reason for some business entities to give up and not to establish a company in Israel from the first place.

Registration of a branch or an office in Israel, by its legal term, is under the supervision of the head office of the company abroad.

That is why, a fiscal representative office in Israel might be the ultimate solution for these kinds of business entities to conduct their business activity in Israel; without the risk of potential damage to the parent company’s relations with other countries that do not have trade relations or have no official statement about their position in relation to Israel.

Note The professional and operational aspects of the organization’s activity in Israel, usually are not handled by the representative office.

No additional Taxation on Dividends:

In most cases, when registering an office with a fiscal representative in Israel, there will be no additional tax on dividends after paying income tax on profits made in Israel.

When a business entity registers as an office with a fiscal representative, withdrawing distributed profits obtained from Israeli business activities isn’t considered a dividend. However, each situation requires a specific examination of the relevant double taxation treaties between the residence country, where the head office located and Israel.

Israel has signed treaties of double taxation with more than 55 countries.

Personal liabilities in Israel:

The fiscal representative office in Israel entails personal liability for all of the Israeli branch tax debts for the foreign company.

As a result, it is customary to provide guarantees and deposits to the trust account of the representative office for the duration of the business activity in Israel. Furthermore, there is a legal business liability cover for the company activities in Israel.

How to get started?

We recommend that you examine and understand all the relevant aspects before making a decision about the type of business entity you want to establish in Israel.

Consult with local experts, who will provide you with the needed local insights and information. Following that, you will be able to consider the advantages, disadvantages and to review all the relevant threats and opportunities to make the best decision for your business. 

If the professional recommendation will support the decision to define business activity as a “fixed presence” in Israel, then a fiscal representative office needs to be open before commencing the activity.

The process of opening and registering such an office can take a few days and up to more than a month, depending on several factors.

As a result, our advice is to make the necessary arrangements in advance, ”the sooner the better”.

Feel free to contact our experts to get a professional consultation.

For more information about Fiscal Representation services in Israel:

FISCAL REPRESENTATION IN ISRAEL

THE ALTERNATIVES WHEN STARTING A BUSINESS IN ISRAEL

The Alternatives when starting a Business in Israel

Your company won a tender offer for a project or a job in Israel, Congratulations!
What is coming up next?

Be aware that the local law requires, either to establish an Israeli company or to register a branch and to operate with a fiscal representative office; to conduct business activity in Israel.

We recommend starting the process before the actual business activity starts. To decide on the suitable legal formal structure, and to register or establish the chosen business entity before conducting any business activity in Israel. For your notice, the whole process might take a while.

Short-term or long-term?

The project period should be a major factor in the decision of the preferable legally structure to serve your business in the best way.

Project contractors, services providers, consultants of any kind, under a short-term or a long-term agreement. In many cases, register a branch with a fiscal representative office pat will be the preferable choice for you.

Fiscal Representative:

Registering with a fiscal representative office means that the local representative office is responsible for the legal and financial issues, dealing with the company’s tax obligations and representing the foreign company before the local Israeli authorities. Yet, the professional and operational aspects of the organization’s activity in Israel, usually are not handled by the representative office.

Since there are cultural and law gaps it is required to have someone who can bridge these gaps over for you, dealing with the local authorities, knowing what to do and how to fulfill the requirements. 

It is a recommended option as a solution for both short-term and long-term projects; you should consider it.

The downside is that you can’t work freely, you need the approval of the head office overseas. Legally you are operating under the supervision of the head office company, which is located abroad.

Therefore, if you are counting on working as an independent office with a full legally freedom, our suggestion is for you to keep reading.

Independent office:

You also need to consider the potential of future activity in Israel.

If you are about to base your activity in Israel, having a head office and establishing an Israeli company with a local permanent office, which is working independently and freely without needing the business and legal approvals of the head office overseas. An office that functions as an independent unit, as an Israeli company essentially.

If this is your case, you should be familiar with the local Israeli companies’ law.

The local companies’ law (1999) states that a foreign company, which manages its business activity in Israel, is required to register with the Ministry of Justice’s Registrar of Companies.

The Company Law, 1999, Section 1 has defined a foreign company as:

“… a company registered outside Israel and anybody of persons, other than a partnership, registered or incorporated outside Israel.”

The Companies Law, Section 346, demands that:

“A foreign company shall not keep a place of business in Israel, and in particular shall not maintain an office for the transfer of shares or for the registration of shares, unless registered as a foreign company under the provisions of this section and unless it pays the registration and publication fees prescribed by the Minister under this section.”

A foreign company is required to register with the tax authorities in Israel, including the VAT, income tax and national insurance authorities.

The registration process should be completed before the company commenced any business activity in Israel.

Applications to register a foreign company must be submitted to the Registrar of Companies within one month following the establishment of the business.

The documents a foreign company requires to fill in and to present are:

(1) A copy and translation of the company’s Articles of Association authenticated by a notary in Hebrew, which confirms the accuracy of the translation. Signatures are not required on a copy of the regulations.

(2) A list of the directors of the company.

(3) The name and address of Israeli representatives authorized to receive documents and mail for the company.

(4) A copy of the document appointing a representative to handle the company’s affairs and to act under a power of attorney.

(5) The certificate of incorporation of the company from its state of origin signed by a notary and a document showing that the company’s registration is still valid and active as of the date the application is filed.

We are acting as the fiscal representative of many foreign companies in Israel; on top of that, our experts provide services for foreign companies’ wishes to register as Israeli companies.

We provide full support through the process of the establishment of an Israeli company; from filling the required documents towards the achievement of the desired recognition as an Israeli company.

Furthermore, after receiving the recognition as an Israeli company; we can provide the company with all the required financial and fiscal services needed.

For more information about Fiscal Representation services in Israel:

FISCAL REPRESENTATION IN ISRAEL

THE REGISTRATION OF A FISCAL REPRESENTATIVE OFFICE IN ISRAEL