preface
preface
preface
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BDO Israel<br />
DOING BUSINESS IN ISRAEL<br />
conducted at arm's length pricing so long as it does not deviate from the<br />
specified price range. If it does, the reported transaction price will be<br />
tax-adjusted as set forth in the Regulations and, consequently, the<br />
assessee will be liable to additional tax accordingly. Furthermore, the<br />
Israeli Regulations stipulate that inter-company loans or advance<br />
payments should be conducted at arm's length (apart from exceptional<br />
cases).<br />
If a one-off international transaction is involved and has been approved<br />
as such by the assessing officer, market research is not obligatory.<br />
Nonetheless, a one- off international transaction will not be exempt<br />
from certain reporting requirements.<br />
8.4.2. Reporting Requirements For International Transactions<br />
The Regulations obligate an assessee that is party to an international<br />
transaction, to include in its annual tax report, in a predetermined form,<br />
the execution of such transaction and the actual conditions and price<br />
thereof at fair market value.<br />
Furthermore, at the assessing officer’s request, the assessee must, within<br />
60 days, submit a comprehensive report detailing the international<br />
transaction. The said reporting obligation shall apply to all assessments,<br />
without taking into account the size of the specific transaction assessed<br />
or its overall turnover. As such, the Regulations stipulate that even in a<br />
transaction executed between a small business and a non-Israeli party<br />
and which is subject to special conditions, the small business must<br />
comply with reporting requirements.<br />
8.4.3. Effective Date and Transitional Regulations<br />
The Regulations went into effect for international transactions executed<br />
from the date of publication of the Regulations (29 November, 2006).<br />
Market research performed before the Regulations went into effect will<br />
be considered as market research conforming to the Regulations, if<br />
performed within two years after the latter were published and provided<br />
it was performed in accordance with OECD accepted guidelines or the<br />
guidelines of OECD member states.<br />
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