New Country-by-Country Reporting Guidelines

February 10, 2023

This year, the Israel Tax Authority (ITA) has issued new guidelines for the implementation of Country-by-Country Reports for multinational groups. These new rules are as follows: 

  • The requirement of an online annual report with financial data and information on the nature of the business relating to all entities of the group.
  • The mandatory filing of a report to the ITA by entities resident in Israel belonging to a multinational group in the fiscal year in which the group filed its report. These entities will also be required to declare the country in which the multinational group’s statement was filed with identification details thereof. 

1. Background

On September 20, 2022, the Israeli Official Gazette published the Income Tax Regulations 2022, amending the Income Tax Ordinance, adopted on June 30, 2022, for the introduction of the three-tier Transfer Pricing documentation requirements of BEPS Action 13. 

2. Country-by-Country Reporting

The Transfer Pricing regime in Israel is regulated by Section 85A (Section 85A) of the Israel Tax Ordinance, which came into force on November 29, 2006, and applies to corporate income tax. The Israeli Tax Authority (ITA) issued several tax circulars which provide guidance on Transfer Pricing.

Concerning the Country-by-Country Report, a parent company resident in Israel with revenues exceeding ₪ 3400 million NIS (New Israeli Shekel -שקל ישראלי חדש) must file an e-form regarding foreign activities within one year after the end of the year.  

3. Country-by-Country Report Provisions

The report must be filed within 12 months after the end of the year to which the report refers. Failure to file the report is considered a failure to file an annual report under section 131 of the Israel Tax Ordinance.

An ultimate Parent Company may file a request to the director of the ITA for another member of the group (a substitute parent entity) to file the report in a different jurisdiction. 

The request must be filed before the end of the year to which the Country-by-Country Report relates. 

Source: The Jerusalem Post  02/10/2023