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Israel unveiled tax reductions on Monday for companies and individuals who invest in local film productions, in an attempt to promote Israeli culture and its image abroad.

The Finance Ministry said in a statement that under the new taxation system, which also applies to commercial television and cable companies, production expenses would be deducted from taxable revenues.

"The promotion of quality cinematic production in Israel through tax incentives is important," Finance Minister Yuval Steinitz said in a statement.

Steinitz said he hoped the measure would lead to production of films that would represent Israel on the international stage and improve its image abroad, building on the success in recent years of Israeli films at international festivals.

Animation "Waltz with Bashir", which depicted the memories of director Ari Folman from Israel's 1982 military invasion of neighbouring Lebanon, won international acclaim for its anti-war message. "Beaufort", another war film based in Lebanon, won a Silver Bear at the 2008 Berlin film festival.