The Israeli government on 12 August 2016 approved the Ministry of Finance’s budget plan for 2017-2018 that includes tax legislative measures that the Israeli government is planning to introduce in the bi-annual budget proposal. Among the tax provisions are measures for country-by-country reporting and transfer pricing documentation requirements.
The budget plan [Hebrew] [PDF 1.95 MB] and the related tax measures are pending approval by the Knesset (Israel’s legislature). The following brief description provides a high-level overview of the country-by-country reporting and transfer pricing documentation measures in the budget plan.
The budget plan sets out country-by-country (CbC) reporting requirements that generally would be in line with OECD base erosion and profit shifting (BEPS) Action 13 recommendations. These CbC rules would apply to a multinational enterprise (MNE) group that has total group revenue in excess of NIS 3.4 billion (approximately €799 million).
Specifically, the budget plan provides for the following general CbC rules:
The budget plan also provides, as a general requirement, that any taxpayer that is affiliated with an MNE group would have to certify its status as a group member to the tax authority.
The budget plan also contemplates the imposition of transfer pricing documentation and recordkeeping requirements on any taxpayer that belongs to an MNE group, or that has engaged in a related-party cross-border transaction. The provisions concerning transfer pricing refer to a transaction under section 85A of Israel’s Income Tax Ordinance or law (section 85A is the primary legislative provision on transfer pricing, and generally its application is limited to related-party cross-border transactions).
Upon demand, the taxpayer would be required to furnish to the tax authority:
For more information, contact a KPMG tax professional:
Tal Karni | +1 (267) 256 4593 | firstname.lastname@example.org
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.