The Internal Revenue Service (IRS) of the United States has released the competent authority arrangement concerning exchanging Country-by-Country (CbC) Reports with Israel. As per the IRS CbC Reporting Jurisdiction Status Table, this arrangement was signed on 16 August 2023 and has been in effect since then. The agreement stipulates that, in accordance with Article 29 (Exchange of Information) of the 1975 U.S.-Israel tax treaty, each competent authority intends to exchange Country-by-Country (CbC) reports automatically.
The exchange will occur when the CbC report indicates that one or more constituent entities of the multinational enterprise (MNE) group to which the reporting entity belongs are either resident for tax purposes in the jurisdiction of the other competent authority or subject to tax on the business conducted through a permanent establishment in the other jurisdiction. CbC reports should be exchanged for fiscal years of MNE groups starting on or after 1 January 2021. These reports should be exchanged as soon as possible but no later than 18 months after the last day of the fiscal year to which the CbC report is related.
CbC reports for fiscal years of MNE groups, starting on or after 1 January 2022, should be exchanged promptly and no later than 15 months after the fiscal year’s end. This requirement applies to the MNE group to which the CbC report pertains. The competent authorities have a timeframe, as described in this paragraph, or three months after the arrangement becomes operative (whichever is later), to exchange the CbC Reports. This exchange should be completed by 16 December 2023.