preface

126
TAXATION
♦ According to the rules for setting-off capital losses prescribed
in the Ordinance - i.e. they may also be set-off against capital
gains from realization of non-negotiable securities.
♦ Against income from interest or dividend paid on the same
security.
♦ Against income from interest or dividend paid on other
securities if the tax rate applicable to such income did not
exceed 25%.
8.3.7.7. Setting-off Capital Losses from Securities Held by a
Company within the Law's Applicability
8.3.7.7.1. Losses Carried Forward from Negotiable Securities
Realistic losses from negotiable securities created till the end of
the 2005 fiscal year and not set-off by the end of that year, may
be set-off solely against profit from the sale of securities traded
on the stock exchange, both in Israel and overseas.
8.3.7.7.2. Losses Created With Effect from 2006 Fiscal Year
A loss created after the above date shall be regarded as an
ordinary capital loss and will be subject to the same rules for
setting-off losses as provided above in regard to companies
outside the Adjustments law.
8.4. THE TRANSFER PRICING REGULATIONS (DETERMINING
MARKET PRICE)
8.4.1. General
Following is a summary of the transfer pricing regulations - Income Tax
Regulations (Determining Market Price) 5767-2006 (“the Regulations”),
prescribed on the basis of Section 85A of the Income Tax Ordinance.
The Regulations stipulate that, in order to ascertain whether an
international transaction conducted between related parties is within the
arm's length pricing requirements, market research must be performed.
Once a comparison method has been established and market research
carried out, the international transaction will be considered as though
BDO Israel