preface

106
TAXATION
Under the recent tax reform, the above exemption will also apply to
securities purchased prior to being listed. Tax will be charged at the
time of sale only on that part of the capital gains generated until the
securities are listed (capital gains on a notional sale).
(c) exemption from capital gains on the sale of Israeli securities acquired
after January 2009.
8.2.2. Companies
8.2.2.1. Domicile of a Corporate Entity
The domicile of a corporate entity is determined on the basis of
two alternative criteria:
(a) If incorporated in Israel.
(b) The corporate entity is managed and controlled from Israel.
A foreign company’s business managed and controlled in Israel
by new immigrants or veteran returning residents will not be
considered an Israeli resident’s business for ten years after the
assumption of residence (if, apart from being managed and
controlled by new immigrants or veteran returning residents,
they would not have been classified as Israeli residents).
8.2.2.2. Income Tax Rates
At present, the Israeli corporate income is liable to a tax rate of
24%, which is expected to decline to 18% by year 2016.
The implication is that the overall tax rate in 2016 on corporate
income distributed to a shareholder as dividend will stand at
38.5% (compared to an overall tax rate of 39% to apply in 2016
on an individual’s income).
Below are the corporate tax rates expected to apply in the
upcoming years:
Year 2011 2012 2013 2014 2015 2016
Corporate tax rate 24% 23% 22% 21% 20% 18%
BDO Israel