globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

21 October 2022

Israel publishes new TP regulations following adoption of BEPS Action 13 principles in domestic legislation

  • Israel has enacted legislation to align its transfer pricing (TP) rules with Base Erosion and Profit Shifting (BEPS) Action 13 requirements (Local File, Master File, and Country-by-Country Reporting).”

  • Now new TP regulations have been published for the implementation of the new TP rules.”

  • Multinational enterprises should carefully review the implementation of the new TP rules and the new regulations, as they may be applicable to the filing of Israeli fiscal year (FY) 2021 tax returns.

On 22 September 2022, an amendment to the Israeli TP regulations was published following the adoption of the BEPS Action 13 principles in domestic legislation. For background, see EY Global Tax Alert, Israel adopts BEPS Action 13 principles, dated 15 July 2022.

The new regulations set an expanded reporting obligation in accordance with Chapter IV of the updated Organisation for Economic Co-operation and Development Transfer Pricing Guidelines from January 2022. The following are the key changes to the Israeli TP documentation requirements starting FY2022:

Requirement for filing a TP report has been reduced to 30 days from demand (compared to 60 days previously).

Israeli taxpayers that are members in a multinational group (MNE Group).whose revenue exceeded ILS150m (approx. US$42.5m) in the preceding year, will be required to prepare and file a Master File (within the 30 days framework mentioned above)

Enhanced disclosure requirements regarding intercompany transactions as part of the annual tax return. This will include the identification of the ultimate parent entity (UPE) of the MNE Group that the Israeli taxpayer is a member of, the consolidated revenue of the MNE Group and information on the reporting obligations of the said UPE.

The new regulations also include rules on Country-by-country reporting, especially in relation to an Israeli UPE in an MNE Group whose revenue exceeds ILS3.4b (approx. US$965m).

Most of the new regulations will now apply to FY2022, which requires substantial preparation, however part of the regulations (especially those which apply to an Israeli UPE which heads an MNE Group with revenue of more than ILS3.4b), are applicable to FY2021.

_________________________________________

For additional information with respect to this Alert, please contact the following:

EY Israel, Tel Aviv

Yaron Kafri | yaron.kafri@il.ey.com

Tsippy Herbst | tsippy.herbst@il.ey.com

Ernst & Young LLP, Israel Tax Desk, New York

Document ID: 2022-6011

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more