Israel To Adopt BEPS Action 13 TP Documentation Rules

by Ulrika Lomas, Tax-News.com, Brussels

02 November 2020

Israel's Government on October 12, 2020, launched a consultation on aligning the country's transfer pricing documentation rules with the three-tiered approach included in the OECD's 2017 Transfer Pricing Guidelines.

The consultation concerns tax law changes to incorporate into Israeli transfer pricing documentation rules the three-tiered approach recommended by the OECD as part of Action 13 of its tax base erosion and profit shifting (BEPS) Action Plan. Israel also intends to obligate groups to prepare contempraneous transfer pricing documentation, which would be filed on request.

The three-tiered approach includes requirements to prepare a Country-by-Country Report (CbC report), a Master File, and a Local File. The three documents would be required from Israel-headquartered groups whose group consolidated turnover was ILS3bn or more (about EUR750m, and about USD888m) in the preceding financial year.

The CbC report provides details of an MNE group's revenues, profit before tax, tax accrued, and other information relevant to a high level risk assessment, for each tax jurisdiction in which the MNE group has a constituent entity.

The Master File is intended to provide a high-level overview of a group's organizational structure, activities globally, and transfer pricing policies, while the Local File is intended to give more specific details about specific related-party transactions.

The consultation document was released in Hebrew. Responses are being welcomed until November 2, 2020.

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