Israeli Tax Ruling System 

Pre Ruling|Tax Authority|Israel 

Dr. Avi Nov, Adv 

September, 2013 

Israel Tax Authority offers taxpayers to obtain advance tax rulings before completing a transactions or getting assurance of their Israeli residency for tax purposes. Such process is often termed by the Israel Tax Authority as Pre Ruling. The Israel Tax Authority announced that it is prepared to rule on various tax matters such as Israeli tax-treaty issues, Israeli transfer pricing rules, international tax issues, real-estate, VAT, mergers and divisions, capital markets, charities, agriculture, builders, options, provident funds and personal tax or another. 

The tax ruling is a decision relates to a tax liability, tax results or tax consequences regarding a deal carried out or regarding income, profit, expense or a loss. Rulings are supposed to be issued by the tax ruling establishment within the Israel Tax Authority in cases when it is not clear what is the tax liability or result of a transaction, before or sometimes after the transaction is carried out. The Israeli pre rulings process aims to reduce uncertainty avoid double taxation and/or avoid taxation on unrealized gains such as share-for-share transactions or employee options. 

The Israel Tax Authority notified that certain standard rulings are the subject of simple process called the green track. The Israel Tax Authority publishes frequently anonymous summaries of rulings it has issued.
 

The Pre Ruling Procedure

The Israel Tax Authority launched recently a new plan for improving service and reducing bureaucracy for professional advisors such as tax lawyers applying on behalf of their clients. It is now possible to apply online for tax rulings, attach relevant documentation and follow up with the process. The service is only available to lawyers and tax advisors authorized to represent their clients. 

The online service will require also technical information, such as whether the ruling request is being made before or after the transaction, after the transaction but before reporting it, or during an ongoing transaction.
 

Pre-Ruling Main Rules

1. The application submitted to the Israel Tax Authority must contain all relevant material details, documents, agreements or draft agreements if no final agreements have been signed. 

2. A pre-ruling application may not be withdrawn without the Israel Tax Authority permission. 

3. The Israel Tax Authority may issue or refuse to issue a ruling or refer the matter to an assessing officer for a reply. However, the applicant must be given a reasonable opportunity to be heard. It should be noted that the ruling cannot be appealed. 

4. The pre-ruling application may be anonymous, but the ruling will only be issued by the Israel Tax Authority after the applicant is identified. 

5. Any pre-ruling binds the Israel Tax Authority unless the information or documents submitted were incomplete false or if the circumstances relating to the ruling have changed. If the ruling was issued by agreement, the applicant is bound by the ruling, unless the act concerned was not carried out. 

6. There is a special procedure for advance-pricing agreements. An application must be accompanied by all material facts and details of the transactions, the method for determining the price, as well as any relevant documents, confirmations, and any other documents or details requested by the Israel Tax Authority. The Israel Tax Authority must issue a ruling within 120 days after receiving all the above documents (may be extended up to 180 days). If the Israel Tax Authority does not respond within this period, the taxpayer’s application is deemed to be confirmed.

Dr. Avi Nov Law Offices, Israeli & international tax law
*This article is intended for informative purposes only and is in no way to be construed as tax advice or a legal opinion 
 
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