Defense Industry and National Security

Defense Industry and National Security

From the outset, the defense industry has attracted a great deal of interest due to its strategic importance, business composition, technology race and close correlation between the industry and government representatives. The defense sector is vast in size and highly diversified (in Israel, hundreds of companies may be directly and indirectly linked to the defense industry) and therefore also wields considerable influence over the Israeli market. 
We at BDO Israel provide our clients in the Defense Industry and National Security Sector industry-specific advisory, tax and business development services and assist these companies in confronting the numerous challenges in this field. We leverage the extensive and rich knowhow that has been accumulated in the Firm, our long-standing acquaintance with the sector and the understanding of the unique business needs of companies in this sector in order to provide innovative and valuable perspectives to our clients and solutions that are specifically tailored for this sector.
In recent years, our Firm has marked the Defense Industry and National Security Sector as one of the focal points of its activities and has accordingly created and customized accounting, economic and tax products to the needs of the companies operating in this sector. We provide guidance and consulting services to our clients as well as assistance in core issues that have bearing on the defense industry, including, inter alia, tax aspects in relation to international operations; business and taxation added value; indirect export of defense products; offset opportunities; identification of business opportunities as well as cooperation opportunities and numerous other services.

Defense Industry - Basket of Products

Audit Services:

  • Audit of financial statements - including in international multiple currency systems, private and public companies, preparation and guidance of offering process. The clients benefit from an analysis of the financial statements that provides a better understanding of the business results, while placing an emphasis on the specific characteristics of the defense arena.  
  • Audit of subsidiaries of the defense industry worldwide.
  • Audit of tax returns as well as ongoing consulting on the level of the company and of the owners.
  • Audit of execution reports and special approvals, including those required under the Law for the Encouragement of Capital Investments, by the Chief Scientists and by bi-national research and development foundations.

Tax Planning:
  • Consulting on reduced tax payments and the applicability of the Law for the Encouragement of Capital Investments on defense industries in development areas
  • International taxation, review of holding structures and formulation of transfer pricing policy for companies seeking to operate in the defense sector overseas

Guidance in Obtaining Grants:
  • Guiding the company in obtaining incentives and grants from the Israeli Chief Scientist, with emphasis on technological developments within the defense industry and national security sector
  • Guidance in submitting grant applications to funds of the Israeli Ministry of Industry Trade and Labor in support of international projects and tenders and for the establishment of a marketing arm in China and India 
  • Submitting applications to the India-Israel R&D Cooperation Initiative

Financial Consulting:
  • Financial due diligence before acquisition
  • Purchase price analysis (PPA) and allocation of acquisition costs
  • Impairment testing
  • Business plan both for emerging businesses and mature companies
  • Management pricing and control both on the product level and for defense projects

IT Consulting and Audit: 
  • Strategic IT consulting - formulation of a strategic plan and multi-annual plans
  • Consulting services in relation to information security and handling of cyber threats
  • Integration of Governance, Risk & Compliance (GRC) systems

Israel-India Offset Transactions: 
Locating an appropriate partner in India, creating a suitable structure for the joint venture agreement, active guidance in the stage of negotiations, strategic planning for the day after, management of the process for the transfer of manufacturing from Israel to India, management of outside consultants (accountants, lawyers, human resources, real estate), work with government companies in the defense sector, government contacts (excluding dealings with the Indian Army).

Southern Caucasus Countries:
A wide range of business development services in the countries of South Caucasus (mainly Georgia and Azerbaijan)

Business Guidance: 
Business guidance of defense companies overseas and in Israel, assistance in the formulation of marketing plans, transfer of manufacturing overseas as an efficiency measure, identification of synergic factors for business collaborations

Investment Banking:
  • Tracking investors for companies seeking growth, while expanding the value chain of their products
  • Tracking investors for defense companies - equity investors, mezzanine investors, debt, institutional and private investors.

Compliance Program: 
To ensure compliance with the prerequisites for obtaining defense marketing and export licenses, we will create for you a work plan for handling concentrations of corruption risks in the organization that we will then use as a basis for the improvement and optimization of the organizations procedures and systems of control over the work processes.

Defense Industry and National Security Team
The professional team that handles the defense industry and national security sector in the Firm possesses extensive experience and knowhow in the provision of accounting, tax and advisory services to clients in this sector. The team has many years of acquaintance with the defense sector and its unique requirements and provides to its clients professional services to the highest standard.