We would like to inform you of some of the mandatory reportable positions that were published by the Israel Tax Authority (the “ITA”). This update focuses on some of the positions, and does not constitute an exhaustive list of all the new positions that were recently published.
As a reminder, according to Israeli tax law, the ITA may publish each year a list of positions that if taken by taxpayers, must be reported, to the extent that taking the position creates a tax advantage greater than 5 million NIS in the tax year in which the position was taken, or above 10 million NIS during a maximum of four tax years. Failure to report a position that is legally reportable, is regarded as a failure to file a tax return that was required to be filed by law, and may have both civil and criminal consequences.
It is important to emphasize that there is no impediment to taking an approach that contradicts the ITA's positions (even more so when some of the positions contradict court rulings or the legislation itself, as will be detailed below), but care must be taken to report the contradicting position. The list of positions is published only after the comments of the practitioners, including the Bar Association, have been received. As in previous years, our firm's representatives took a significant part in formulating the Bar Association's response to the draft list, a response that helped reduce the number of new positions published in 2019 by about one third, compared to the draft list published by the ITA. It should be noted that the list of positions is a cumulative list, so that the new positions join those that have already been published in previous years, which also remain reportable positions in the relevant cases.
Our firm has vast experience in addressing these tax matters. We recommend contacting us for analyzing the relevance of the list of positions, to ensure compliance with the tax obligations, to receive opinions supporting the adoption of positions that are contrary to the above positions and also to optimally plan future transactions.