Further Queries

An analysis of the implications by Herzog, Fox & Neeman


Our Israeli firm, Herzog, Fox & Neeman, provides an overview of discussions held by the Finance Committee of the Knesset (the Israeli Parliament), which concern potential amendments to the Israeli Tax Ordinance and the Israeli transfer pricing regulations pursued by the country’s Tax Authorities.


Read the full article from our Israeli team below…


June 2022


In recent months, Herzog, Fox & Neeman, represented by our Head of Transfer Pricing, Adv. (Economist) Eyal Bar-Zvi, participated on behalf of the Israeli Bar in the discussions held by the Finance Committee of the Knesset (the Israeli Parliament). The discussions dealt with potential amendments of the Israeli Tax Ordinance (the “Ordinance”), as well as to the Israeli transfer pricing regulations (the “Regulations”) pursued by the Israeli Tax Authorities (the “ITA”).




In 2020, the Finance Committee, under scrutiny from the Organization for Economic Co-operation and Development (OECD) for the lack of Master File and Country by Country Report (CbCR) regulations, suggested some key amendments to the Regulations. We have been involved in these discussions from the outset. The ITA was demanding stringencies in all aspects of Transfer Pricing documentation requirements.


The main focus of the aforementioned amendments are with respect to the inclusion of Master File and Country by Country Report (CbCR) concepts into the Regulations, as well as updates to other reporting obligations in Israel. In June 2022, the Finance Committee, subject to the approval (2nd and 3rd reading) of the law in the Knesset, confirmed numerous amendments. This step is likely to prevent the inclusion of Israel in the OECD’s “black list” of uncooperative tax havens, as was threatened by the OECD.


Transfer Pricing Documentation Amendments – In General


With respect to the general Regulations, certain amendments were discussed in order to further align the Israeli TP documentation with the standard recommendations from the OECD. In this regard, full TP documentation is expected to include a table depicting the senior level job descriptions within the framework of the holdings table and group / company structure, without names, however. The companies will also be required to detail where the senior officials are physically located (which country). In addition, while generally already included in local Israeli TP documentation, it will be added into the Regulations that a list of competitors will be required, as well as a description of the main service agreements.


The most notable amendment to the Regulations will be the requirement to submit documentation to the ITA within 30 days of request, as customary in other jurisdictions, rather than the 60 days Israeli clients currently required. The ITA asked for an even shorter timeframe, however we successfully argued in front of the committee that it should not fall below 30 days. In this respect, the ITA expects that TP documentation will be in place and updated periodically, as the TP study is the basis for annually filing the Form 1385.


Master File


As mentioned, in order to streamline the Regulations with other OECD member countries, the Finance Committee incorporated Master File requirements. Initially, the draft amendments (in 2020) required a zero threshold on the Master File filing requirements. The Israeli Bar, represented by Eyal Bar-Zvi, disagreed with the Israeli CPA association and the ITA regarding the revenue threshold. The Finance Committee settled that the threshold will be NIS 150 million, per our suggestion, the current equivalent of Euro ~43 million.


It is very important to note that this requirement applies to an Israeli subsidiary even if the parent company’s jurisdiction does not require a Master File.


The Master File template will follow the OECD Master File template, however with some adjustments for Israeli companies, which widen the reporting scope.




CbCR concepts and reporting obligations will be in line with other OECD member countries. In this regard, the Group revenue threshold remains at Euro 750 million, as of the exchange rate of January 2015, as described in the OECD Guidelines, approximately NIS 3.4 billion. At the time of writing, due to fluctuations in the exchange rate, the equivalent of NIS 3.4 billion is approximately 950 million Euro.




Following a couple of years of discussions and arguments, the Finance Committee has confirmed, subject to 2nd and 3rd readings, amendments to the Regulations. The key focus of these amendments is in reference to Master File and CbCR requirements, which the Israeli authorities were under pressure to incorporate into law, in order to prevent the inclusion of Israel in the OECD’s “black list” of uncooperative tax havens.


The foregoing is a general description only. Please contact us for any further inquiries.


[Meir Linzen, Chairman of the Firm and Head of Tax] Meir Linzen linzen@herzoglaw.co.il

[Eyal Bar-Zvi, Partner and Head of Transfer Pricing] Eyal Ba-Zvi barzvie@herzoglaw.co.il




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Article tags

Israel | OECD | Tax | Tax Policy


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