The Ministry of Finance on 1st of May 2017, signed tax regulations for implementing the OECD’s nexus approach. This approach is mainly a BEPS requirement in case of intellectual property (IP) preferential tax regimes. The proposed regulations are waited for the approval from the Finance Committee of their Parliament. Once approved, this new IP regime will enter into effect from 1st of January 2017. The Finance Minister circulated the regulations in order to give the proper guidance regarding the new Israeli IP regime’s implementation. The maximum benefit available for IP income is a reduced 6% corporate tax rate under the new Israeli tax legislation. In line with the OECD BEPS Action 5 guidelines, tax incentives in case of intellectual property will be restricted on the extent of research and development (R&D) activities of taxpayers getting benefits.
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