Transfer pricing documentation legislation approved for 2022
The Israel Knesset on 30 June 2022 approved transfer pricing legislation that introduces the three-tiered documentation requirements of BEPS Action 13. The legislation constitutes another step in the Israeli Tax Authority’s strengthening of its supervision and control procedures in the area of transfer pricing.
Proposed regulations have not yet been approved, but are expected to be approved soon.
The legislation, which entered into force recently, provides that ultimate parent entities of multinational enterprise (MNE) groups that meet a consolidated revenue threshold of ILS 3.4 billion are required to submit a country-by-country (CbC) report.
The following presents the legislation’s main points regarding the update to the documentation requirements:
The update to the documentation requirement is a continuation of the upgrade to the transfer pricing form – Form 1385 – that taxpayers attach to the tax return, and to Income Tax Circular 1/2020, published in June 2020, which specifies the conditions required to comply with the provisions of Section 85A of the Income Tax Ordinance and related regulations.