To encourage business and residence in the area around the city of Eilat, the Israeli government has declared it a Free Trade Zone. They have offered several benefits to resident companies and individuals, such as exemption from the standard 17% VAT tax, employer refunds of up to 20% of gross wages paid to employees, and tax credits for all residents up to 10% of their income.

Eilat has also been declared a Free Port Zone. Authorized enterprises established in Eilat get exemption from all taxes for seven years and a maximum tax rate of 30% after that, or 25% if an Approved Enterprise. They also get a maximum tax of 15% on dividends, an exemption from capital gains tax on inflationary gains, exemption from capital gains for foreign residents who sell shares purchased with foreign currency, exemption from property tax, and permission for enterprises to use foreign currency without limit. Ashdod and Haifa, who will soon be undergoing massive upgrades of their nautical facilities, are also Free Port Zones.

A location in the Northern Negev Desert was recently declared the first Free Export Processing Zone on June 20th, 1994. These zones will each developed by a concessionaire, a private enterprise with a 49 year lease to build, operate, and manage the zone - leasing property to zone businesses, maintaining the zone at peak efficiency, and providing security and utilities for the entire zone. In order to become a concessionaire, a private business must prove they have the financial and organizational capacity to develop the region, and provide a detailed business plan for achieving this goal. Any private enterprise engaged in manufacturing, research and development, or overseas services may become a zone business if it will not endanger Israeli security interests and will comply with Israeli environmental health and safety codes. During the first twenty years of operation, concessionaires and zone businesses are exempt from any income taxes and other direct taxes, except for a 15% tax on distributed income and capital gains. Goods imported or exported abroad are exempt from all licenses, taxes, duties, quotas, restrictions and foreign currency controls.

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