Either way, it's tough to get a work visa, about as difficult as the US or Europe. If I were doing it, I'd go on a tourist visa. All in all Tel Aviv is a great place to hang for a while, but if you're looking to relocate somewhere for a year or so I'd look for a cheaper and easier places in South America or Asia. Even Vancouver might be cheaper. (Or if you're an EU member there's Berlin and possibly some Easter Europe cities?)
And Montreal is even cheaper (about 2/3 the cost of living).
If I were in the OP's position, I believe I'd incorporate (if I really need to at all) where I have citizenship, then work on the product wherever I choose.
If you're talking an office with employees etc, that's a different story, but if it's a couple ppl working from an apt or cafe, perhaps with other staff telecommuting from where they live, I can't imagine this would a problem anywhere.
I tried searching for this question and turned up a lot of alarmed newspaper articles about a rising tide of non-Jewish immigration, and even government promises to do something about this.