The law introduces a 15% minimum tax on profits of large multinationals operating in Israel, aligning the country with global BEPS standards and ensuring local profits are taxed at a minimum rate.
The Israeli parliament (Knesset) approved the Corporate Minimum Tax for Multinational Groups Law in its second and third readings, implementing the OECD’s Pillar 2 rules into domestic legislation on 29 December 2025.
The legislation incorporates the OECD’s Qualified Domestic Minimum Top-up Tax (QDMTT) into Israeli law. Under the new rules, multinational enterprises with consolidated global revenues of at least EUR 750 million and operating in Israel will be subject to an effective corporate tax rate of at least 15% on their Israeli activities. The measure is designed to prevent the shifting of taxable profits to low-tax jurisdictions.
The law also gives effect to the OECD’s Base Erosion and Profit Shifting (BEPS) initiative, which involves around 140 participating jurisdictions, including Israel. It aligns Israeli tax legislation with the OECD’s Pillar 2 framework by introducing a domestic top-up tax to ensure that profits earned in Israel are subject to a minimum effective level of taxation, thereby limiting opportunities for base erosion and profit shifting.
Earlier, Israel’s Ministry of Finance advanced the adoption of international tax standards by releasing a legal memorandum for public consultation on 19 October 2025.
