|Fahn Kanne & Co – Grant Thornton|
|Gornitzky & Co|
|Herzog Fox and Neeman|
The BEPS Project has been the main transfer pricing topic this year, especially where the Israeli government is taking actions to implement some of the recommendations given by the OECD.
Multinationals in Israel have started examining their intercompany arrangements with the new standards in mind to evaluate what changes are required. "This could relate to intercompany models the BEPS Project is targeting, such as the commissionaire and marketing support arrangements, or to models that may require a different pricing method that could significantly change the multinationals effective tax rate," said Guy Attias, head of transfer pricing at Deloitte in Israel.
One of the immediate impacts from BEPS in Israel is an update to the transfer pricing documentation rules. Israel has announced that they will adopt country-by-country reporting (CbCR) which has resulted in multinationals hastening to make the appropriate preparations.
The Israeli authorities are focusing on the substance over form concept, a core component driving the OECD BEPS Project, even before the general BEPS rules are formally adopted. "When auditing inbound and outbound intercompany transactions, they are focusing on value creation and on the location of the people aspect of the audited multinational," said Eyal Bar-Zvi of Herzog Fox and Neeman.
The pressure from the tax authorities has become stronger and it is expected that the government officials will carefully scrutinise transfer pricing issues in the coming year. "Taxpayers should be more careful," said Daniel Paserman of Gornitzky & Co.
Income Tax Office
66 Kanfei Nesharim Street
Tel: +972 2 654 5111; +972 2 654 5415
Fax: +972 2 654 5183; +972 2 654 5413
(As of January 1 2016)
|Corporate income tax rate||25% (a)|
|Capital gains tax rates||25% (a)|
|Branch tax rate||25% (a)|
|Royalties from patents, know how, etc.||25% (a)(b)(d)|
Net operating losses (years)
Source: EY 2016 Worldwide Corporate Tax Guide