The budget plan proposal for 2017-2018 announces significant changes in accordance with international taxation, and would be appropriate for individuals, multinational corporations operating in Israel and Israeli corporations operating abroad.
The following brief description gives a high-level summary of some of the proposed tax changes and expected consequences:
An amendment to section 1 of the Israeli Tax Ordinance (ITO) would introduce a presumption that the management and control of businesses (i.e., a body of persons) incorporated outside of Israel would be regarded as being located in Israel if: (i) Israeli residents are the controlling persons for tax purposes, the beneficiaries of or are entitled to 50% or more of its income or profits, directly or indirectly; and (ii) The applicable effective tax rate for all of its profits, if not viewed as Israeli resident is 15% or less and the control of business is a resident of a country with which Israel doesn’t have any double tax treaty; or it’s country of residence, if not regarded as a resident of Israel, is a country that does not levy tax on income generated outside of the country.
Additionally, an amendment to section 131 of the ITO has been proposed, with the change creating and imposing a reporting obligation for a body of persons claiming such measures do not apply to it.
