Ministry of Finance initiated a public consultation on draft legislation introducing a domestic top-up minimum tax, set to apply from 1 January 2026 to Israeli-resident entities in multinational groups with global revenues of EUR 750 million or more.
The Israel’s Ministry of Finance published a draft legislation for a Domestic Top-Up Minimum Tax (the draft law) for public consultation on 5 October 2025.
According to the draft memorandum and the GloBE rules, the regime will apply from 1 January 2026
tax year to Israeli-resident entities that are part of a multinational group with annual consolidated global revenues of EUR 750 million or more (“participating entities”).
Under the proposal, applying the QDMTT in Israel will ensure alignment with Pillar 2 rules and prevent foreign countries from taxing income that forms part of Israel’s tax base, in cases where the effective tax rate on such income is below the minimum rate.
Accordingly, if a multinational group operates in Israel and pays an effective tax rate below 15% on its local profits, the Israel Tax Authority will levy the top-up tax through the QDMTT.
This step prevents the transfer of taxing rights over Israeli-source income to foreign jurisdictions that have adopted the IIR or UTPR, thereby preserving Israel’s fiscal sovereignty and ensuring appropriate tax collection.
Public consultation on the draft legislation will remain open until 26 October 2025.
Earlier, the Ministry of Finance announced its initial plan to implement the qualified domestic minimum top-up tax (QDMTT) in 2026, as part of the OECD Pillar 2 international tax reform.
