The majority of the revenue from the high-tech industry is tied to workers. 85 percent of this revenue comes from taxes on wages, including income tax, social security and health insurance. Only 15 percent comes from corporate tax. Over a six-year period, nearly NIS 100 billion was collected from high-tech workers’ income tax payments, accounting for one-third of income tax revenues during the period.

Dror Bin, CEO of the Israel Innovation Authority, said: “This publication underscores the strategic importance of the high-tech sector for the Israeli economy and government revenues. For the first time, we present a comprehensive review of the various tax levies of high-tech workers and companies. High-tech serves as a ‘growth engine’ of the economy and a ‘shock absorber’ in times of crisis. The findings from this analysis underscore the importance of government measures to protect the sector and ensure its continued growth, even during economic downturns.”

The report highlights a significant gap between high-tech workers and the rest of the economy: the average monthly income tax payment of a high-tech worker was NIS 6,966 in 2021, 6.3 times the average for the rest of the economy. The Israeli economy is increasingly dependent on income tax payments from the high-tech sector: between 2016 and 2021, income tax revenues from high-tech workers increased by about 66% in real terms.

Foreign companies such as Nvidia, Intel and Google play a significant role in the local high-tech industry, both through their purchases and through their contribution to innovation. Although their workers only make up about 20 to 25 percent of the total high-tech workforce and foreign companies only account for 0.3 percent of all economic enterprises, their contribution amounts to more than one-third of the total high-tech contribution to government revenue, both in the form of labor-related taxes and corporate taxes.