The Budget for the fiscal year 2013-2014 has been accepted by the Israeli government initiating important changes to both individual and corporate tax regulations. The laws regarding tax rates will take effect as of January 1, 2014, and the remaining provisions will generally take effect as of August 1, 2013.
According to the law, the Standard Corporate Income Tax (CIT) rate has been increased from 25% to 26.5%. Revised CIT rates will be applicable to privileged business entities and the assets that are subsequently included in dividend distributions will be taxed. The applicable corporate tax rate for special Economic Zone A including Jerusalem is 9% and the rate for other remaining areas in Israel is 16%. Dividend withholding tax applicable to distributions made from privileged business entities has been raised from 15% to 20%. The domestic capital gains tax relief will be restricted for non-residents.
