Israel’s tax authority published Income Tax Circular No. 11/2018 and Income Tax Circular No. 12/2018 (September 2018) as guidance on the characterization and selection of the most appropriate transfer pricing method for distribution or sales and marketing activities as well as the introduction of safe harbors for intra-group sales and services activities.
The circulars were originally issued in Hebrew. The KPMG member firm in Israel has provided unofficial English translations of the circulars:
Companies that implement these safe harbors will be relieved from providing what are otherwise mandated comparable benchmark analyses. All other elements of the required transfer pricing documentation remain in place. The described margins for the safe harbor services are to include “direct and indirect [expenses], including expenses that should have been required in accordance with generally accepted accounting principles such as employee options.”
For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services practice in Israel:
David Samson | (+972) 3.684.8970 | firstname.lastname@example.org
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