On 30 June 2022, the Israeli Parliament passed legislation to amend Section 85A of the Income Tax Ordinance (ITO) and its regulations, by introducing three-tiered transfer pricing documentation requirements of BEPS Action 13.
The legislation entered into force on 5 July 2022, that introduced requirements for a Local File, Master File, and a Country-by-Country (CbC) report.
Key changes:
- New Section 85B of the ITO introduced to stipulate TP documentation obligations that should be prepared for each international transaction, in order to be provided to the tax assessing officer upon request within 21 days.
- The ultimate parent entities of MNE groups meeting a consolidated revenue threshold of ILS 3.4 billion are required to submit a CbC report within 12 months following the end of the reporting fiscal year.
- A Master file requirement is also introduced for members of MNE groups with turnover exceeding ILS 150 million.
The provisions of the tax law introducing the requirements apply from tax year 2022, although companies may submit a CbC report for the 2021 tax year as well, which is due by 31 March 2023.
