The Israel Tax Authority (ITA) issued Income Tax Circular No. 1/2025 on 11 February 2025, which clarifies amendments to the Income Tax Ordinance. The amendments pertain to transfer pricing and country-by-country (CbC) reporting requirements.
The Circular outlines Israel’s CbC reporting requirements for MNE groups with annual consolidated revenue over ILS 3.4 billion (EUR 750 million) in the prior year. According to the Circular, CbC reports are due within 12 months after the fiscal year ends.
Additionally, the Circular explains how to submit CbC reports through the Automated Information Exchange Portal, the automatic exchange of these reports.
The Circular also provided the required CbC report Form 1685, which companies must submit to comply with international tax regulations.
The Circular outlines where a CbC report should be filed:
- If the ultimate parent entity is in Israel, the CBC report must be submitted in Israel through the Automated Information Exchange Portal. Alternatively, an alternative (surrogate) parent entity can submit the report in another country if conditions are met. These conditions include an exchange agreement with the relevant authority and notifying the ITA;
- If the ultimate parent entity is not resident in Israel, a CbC report is considered submitted in Israel if it is filed in a foreign jurisdiction and exchanged with Israel or filed directly in Israel for exchange or local filing purposes.
The Circular also clarifies the secondary local filing requirements, which allows the ITA to require an Israeli non-parent entity to file a CbC report if:
- The ultimate parent is not obligated to file a CbC report in its home country;
- There is no agreement to exchange CbC reports with the ultimate parent’s jurisdiction of residence, or;
- A competent authority agreement for exchanging CbC reports is in place with the ultimate parent’s jurisdiction, but there is a systemic failure to exchange reports from that jurisdiction.
Earlier, Israeli tax authorities published detailed guidelines and technical instructions for submitting Country-by-Country (CbC) reports on 8 December 2025 and 25 December 2024, respectively.
