At a glance
#Dates are for an example year end of Dec 31, 2025. Where local law moves a deadline on a weekend or national public holiday to the next working day, the date shown is already moved. Use the Deadlines tool for your own year end and thresholds.
Verified 2026-10-26. Tax authority: Israel Tax Authority (רשות המסים בישראל). Summaries are simplified; check the linked official source before relying on them.
The law
#Israel applies the arm's length principle in section 85A of the Income Tax Ordinance (ITO). An international deal between parties with special relations must be reported and taxed at market conditions, meaning the price and terms unrelated parties would have set (s. 85A(a)). Special relations include a relative, or control (50% or more of any means of control on at least one day in the tax year) by one side over the other or by one person over both (s. 85A(b)). The Income Tax (Determination of Market Conditions) Regulations 2006 set the methods and the documents. If the taxpayer gives the required documents, the burden of proof moves to the assessing officer when he disagrees with the parties' agreements (s. 85A(c)(2)). Amendment 261 (Sefer HaChukim 2993, 5 July 2022) and the regulations amended on 22 September 2022 added the OECD master file and country-by-country (CbC) rules from tax year 2022 (s. 85B and 85C).
Documentation
#On the assessing officer's request, the taxpayer files within 30 days a report with the data in regulation 5(a), such as the group structure, the deal terms, the main competitors, the comparable deals and the method, with the contracts, the benchmark study and any foreign report attached (reg. 5(a) and (b)). If the taxpayer belongs to a multinational group with turnover above NIS 150 million in the prior year, the report also includes a group overview, which works as the master file (reg. 5(a)(10)). With the annual return the company files Form 1385 (international transactions), Form 1485 (international loans) and Form 1585 (declaration that it is part of a multinational group). Form 1385 asks whether a TP study exists on filing day. An Israeli ultimate parent with group turnover above NIS 3.4 billion files the CbC report online within 12 months of the tax year end (s. 85C(c)). Other Israeli entities of such a group give the CbC filing country in Form 1585.
Methods
#The preferred method is the price comparison method (CUP or CUT). If it cannot be used, the taxpayer compares profitability (cost plus, gross margin, operating margin or another profit ratio) or the usual split of profit between joint parties, and if neither fits, another method that suits the facts (reg. 2(a)). Comparable deals come from no more than three earlier tax years and are averaged (reg. 3). A result is at arm's length if it is inside the interquartile range (25th to 75th percentile), or inside the full range for an unadjusted price comparison (reg. 2(b)). If it is outside, the price is reported at the median (reg. 2(c)). A taxpayer can ask the Director for advance approval of a price. He must answer within 120 days, extendable to 180 days, and silence counts as prima facie approval (s. 85A(d)).
Penalties
#No penalty in the ITO or the regulations is aimed at transfer pricing alone, so the general rules apply. A deficit above 50% of the tax carries a 15% fine unless the taxpayer shows no negligence, and double that if the deficit was intentional (s. 191(b) and (c)). A late online report can bring a financial sanction for each full month of delay (s. 195B; NIS 540 in the ITA consolidated text, an amount indexed each year). A false report or false information is an offence with up to two years in prison or a fine (s. 217). A CbC report that is not filed as required is treated as a breach of the duty to file under section 131 (s. 85C(d)). Law firm commentary warns that a false claim in Form 1385 that a full TP study exists can bring fines and criminal exposure.
Pillar Two
#Israel enacted the Minimum Corporate Tax in a Multinational Group Law, 5786-2025, published on 31 December 2025. It is a domestic top-up tax (QDMTT) only, with no income inclusion rule and no undertaxed profits rule. It applies to tax years that start on or after 1 January 2026, for Israeli entities of groups with revenue of EUR 750 million or more in two of the four prior years. The return is an online form due 15 months after the tax year end, and the tax is due the same day (s. 4(a) and 8(a)); the law gives no longer period for the first year. A one-time notice is due within 90 days after the end of the first tax year in scope, or within one year of 1 January 2026 for entities already in scope (s. 7(a) and 28(a)). Fines are NIS 50,000 for a late return and NIS 100,000 for a late notice (s. 10(a)).
Other rules
#Israel's tax year is the calendar year (ITO s. 1), but the Director can set a special assessment period (s. 7), and for the minimum tax a 12-month period starting on another date (Minimum Corporate Tax Law s. 21), so fixedFye is 12-31 and users should override it for such an entity. The company return (Form 1214) is due by 31 May after the tax year, or five months after a special period (s. 132(b)); the ITA moved it to 31 July for tax years 2023, 2024 and 2025. Companies filing through a representative use the yearly ITA extension arrangement, whose last stage for tax year 2025 is 31 March 2027. Interpretation Law s. 10(c) moves the end of a period that falls on a statutory rest day or holiday. Those days are Saturday, the Jewish holidays in s. 18A of the Government and Law Ordinance, Independence Day (Independence Day Law s. 1(c)) and Knesset election day (Basic Law: The Knesset s. 10). Friday is not one, so restDays is [6]. Fixed calendar dates (the return and its annexes) are set to roll: false.
Filings and deadlines
#| # | Filing | When | Who | Source |
|---|---|---|---|---|
| 1 | Notice that the CbC report is filed in another country (alternate parent entity) Optional. The Director approves an alternate parent entity only if the ultimate parent applied through the HAMA portal by the end of the tax year to which the report relates, proof of the foreign filing is given by the CbC due date, and a competent authority agreement is in force with that country (ITO s. 85C(e), TP Regulations reg. 5A(a)). Without the notice the Israeli parent files the report in Israel. If the foreign report does not reach Israel within the agreement period (up to 15 months), the Israeli parent must file in Israel. | Last day of the fiscal year (e.g. Dec 31, 2025) | An Israeli ultimate parent of a group with turnover above NIS 3.4 billion in the year before the tax year that wants another group entity to file the CbC report in its own country. | TP Regulations reg. 5A and ITA Circular 01/2025, point 2.2.1.2 (gov.il) |
| 2 | Country-by-country report (online, HAMA portal) Due within a year from the end of the tax year (ITO s. 85C(c)). Filed online in the HAMA portal on the form the Director sets (Form 1685 in the Circular). A resident parent with turnover reported in another currency translates it to shekels at the average rate for the tax year or for the quarter, applied consistently. A missing, partial or wrong report is treated as a failure to file under section 131 (s. 85C(d)). The Israeli parent that files abroad through an alternate parent entity must show proof of filing by the same date. | 12 months after year end (e.g. Dec 31, 2026) | An ultimate parent entity resident in Israel in a multinational group whose turnover in the year before the reporting year exceeded NIS 3.4 billion (ITO s. 85C(c)). A resident parent below the threshold may file voluntarily (s. 85C(f)). The Director can require an Israeli entity of a foreign-parented group to file locally if the parent's country has no CbC rule, has no exchange agreement with Israel, or there is a systemic failure (reg. 5A(b)). | ITO s. 85C(c) and ITA Circular 01/2025 (gov.il) |
| 3 | Corporate income tax return (Form 1214) The law sets 31 May after the tax year for a company that files online or keeps double-entry books, and five months after the end of a special assessment period (ITO s. 132(b)). The ITA postponed the date for companies to 31 July in each of the last three years: 31 July 2024 for tax year 2023 (notice of 6 March 2024), 31 July 2025 for 2024 (notices of 2025, last of 15 June 2025) and 31 July 2026 for 2025 (notice of April 2026). The dates shown use those postponements, and 31 May for tax year 2026 onward until the ITA announces a change, so check the ITA notice each spring. Represented companies get the staged arrangement, set by a new ITA notice each year and often postponed again: its last stage was 30 June 2025 for 2023, 30 June 2026 for 2024 (for representatives that met the earlier stages) and is 31 March 2027 for 2025. The tax year 2026 arrangement is not published yet, so the extended view shows 31 May 2027 for it. The assessing officer can also postpone the date for a good reason (s. 133). A late online report can bring a financial sanction for each full month of delay (s. 195B). The Ordinance does not say that a fixed date on a Saturday or holiday moves, so the date is not rolled. | Extended: company filing through a representative (accountant or tax adviser) under the yearly ITA representatives' extension arrangement; the representative must file set shares of its clients by dated stages, and the last stage is the last day for all (tax year 2025: 10% by 29 October 2026, 40% by 31 December 2026, 100% by 31 March 2027) (e.g. Mar 31, 2027); original due date Jul 31, 2026 | Every company with income in the tax year (ITO s. 131(a)(5)). Companies file online. Form 1214 carries the annexes below. | ITO s. 132 and 133 (gov.il); ITA notices to representatives of 28 April, 20 August and 23 September 2026 (gov.il, the last as reproduced by Alex Shapira & Co.) |
| 4 | Declaration on international transactions (Form 1385) Filed as an annex to the annual return, so the date is the return date. For each deal it gives the parties, the type and price, the method and the profitability ratio, and states that the deal is at market conditions. Since the version of 23 December 2022 it also asks how the price was set (local safe harbour, one-time deal or an existing TP study) and whether a TP study exists on filing day. The form is signed like an affidavit. A false claim that a study exists can bring fines and criminal exposure for a false statement (s. 217; law firm commentary). Circulars 3/2018, 11/2018 and 12/2018 are attached to the ITA form page. | With Corporate income tax return (Form 1214) (extended) (e.g. Mar 31, 2027); original due date Jul 31, 2026 | Every taxpayer with an international transaction with a related party abroad (TP Regulations reg. 5(d)(1)). The tool tests any amount above zero because no de minimis limit was found in the regulations. The Director may exempt small or one-time deals by rules under s. 85A(e1), and whether such rules are in force was not confirmed. | ITA service page, Form 1385 (gov.il), and TP Regulations reg. 5(d) |
| 5 | Declaration on loans in international transactions (Form 1485) An annex to the annual return, listed on the ITA company return page as the declaration on loans in international transactions. Law firm commentary (Herzog) says financial transactions are reported on this separate form, and other deals on Form 1385. The date is the return date. | With Corporate income tax return (Form 1214) (extended) (e.g. Mar 31, 2027); original due date Jul 31, 2026 | Taxpayers with loans in international transactions with related parties. The tool tests any international transaction because it cannot separate loans. Who must file was not read from the form instructions. | ITA 2025 company return page, annexes list (gov.il) |
| 6 | Declaration of belonging to a multinational group (Form 1585) An annex to the annual return, so the date is the return date. It names the group and its ultimate parent, gives the group turnover band in the year before the tax year (up to NIS 150 million, up to NIS 3.4 billion, or above) and says whether a CbC report is due and in which country it is filed. Israeli entities of a foreign-parented group also send the parent's details by email to aeoi@taxes.gov.il, with no date set in the circular. An Israeli entity of such a group with no tax file must open one to file the form (Circular 01/2025, point 5(6)). | With Corporate income tax return (Form 1214) (extended) (e.g. Mar 31, 2027); original due date Jul 31, 2026 | Every Israeli entity or permanent establishment that is part of a multinational group, whatever its size (ITO s. 85C(b), TP Regulations reg. 5(d)(2)). Domestic-only companies do not file it. | ITO s. 85C(b), ITA Form 1585 and Circular 01/2025 (gov.il) |
| 7 | Group overview in the TP report (master file content) Israel has no separate master file form. The group overview (structure chart, business and supply chain of the five largest products or services, intangibles, financing, consolidated financial statements and tax rulings) is part of the report under reg. 5(a), which is due within 30 days of the assessing officer's request. It should be ready by the time the return is filed because Form 1385 asks whether the study exists. | Within 30 days of a tax authority request | An Israeli entity in a multinational group whose group turnover in the year before the reporting year exceeds NIS 150 million (TP Regulations reg. 5(a)(10)). It applies to Israeli subsidiaries even if the parent's country has no master file rule (law firm commentary). | TP Regulations reg. 5(a)(10) (gov.il) |
| 8 | Transfer pricing report and study (local file) The report is due within 30 days of the assessing officer's request (reg. 5(a), as amended in 2022). The task brief said 60 days, but the regulation says 30. It contains the data in reg. 5(a)(1) to (9), and attaches the contracts, the market conditions study and TP analysis, any study made for a foreign tax authority, the foreign report and any opinion (reg. 5(b)). The tax assessor can demand the documents under ITO s. 85A(c). If they are handed over, the burden of proof moves to the officer. The Director can decide that the reg. 5(a) duty does not apply to small or one-time deals under s. 85A(e1), and the version of reg. 5(a) that applies after such rules is not used here. | Within 30 days of a tax authority request | A taxpayer that is a party to an international transaction with a related party (TP Regulations reg. 5(a)). The tool tests any amount above zero because no minimum was found. | TP Regulations reg. 5 (gov.il, consolidated text) |
| 9 | Notice to the Director that the minimum tax law applies (one-time, online form) An entity to which the Rules apply on 1 January 2026 gives the notice within one year of that date (Minimum Corporate Tax Law s. 28(a)). Interpretation Law s. 10(b) arguably ends that year on 1 January 2027, a Friday, but the date shown is 31 December 2026 so the notice is safely inside the year. An entity that comes into scope later gives the notice within 90 days after the end of the tax year in which it first fell in scope (s. 7(a)); that later date is not modelled. One notice covers all Israeli entities if a representative entity gives it for them (s. 7(b)). A missing notice can cost NIS 100,000 (s. 10(a)(2)). The online form was not found. | Starts with years ending on or after 2026-12-30 | Israeli constituent entities of groups with consolidated revenue of at least EUR 750 million in at least two of the four preceding fiscal years (Rules art. 1.1, annex to the law). | Minimum Corporate Tax Law 5786-2025 s. 7 and 28, Sefer HaChukim 3476 (Knesset) |
| 10 | Notice naming the representative entity (optional, online form) The notice is due within 90 days after the end of the tax year for which a return is first filed (s. 4(b)), so 31 March 2027 for a calendar 2026 year. A change of representative entity is noticed within 90 days after the end of the tax year for which the change is wanted. No separate fine for this notice was found. If no notice is given, each Israeli entity files and pays for itself. | Starts with years ending on or after 2026-12-30 | Israeli constituent entities of an in-scope group that all agree to have one of them file the return and pay the tax for all (s. 4(b)). Optional. | Minimum Corporate Tax Law 5786-2025 s. 4(b), Sefer HaChukim 3476 (Knesset) |
| 11 | Domestic top-up tax return (QDMTT, online form) Filed online with the assessing officer no later than the end of 15 months after the end of the tax year (Minimum Corporate Tax Law s. 4(a)). For a calendar 2026 year that is 31 March 2028. The law gives no longer period for the first year. The tax year is the calendar year unless the Director, at the entity's request, sets a 12-month period starting on another date for all Israeli entities of the group (s. 21). The form shows the calculation for each entity and each entity's share (s. 4(d)). The filed return counts as the entity's own assessment (s. 5(a)). Late filing can cost NIS 50,000, plus one tenth of that for each full month the breach continues, and the same amount again for a repeat within two years (s. 10 and 11). For the first four years the Director may not send a notice of intended penalty unless he first warned the entity in writing and gave it time to fix the breach (s. 19). Israeli forms or regulations for exemptions and safe harbours were not found. The first regulations were due to the Finance Committee by 1 July 2026 (s. 27). | Starts with years ending on or after 2026-12-30 | Israeli constituent entities of groups with consolidated revenue of at least EUR 750 million in at least two of the four preceding fiscal years (Rules art. 1.1, annex to the law). Tax years starting on or after 1 January 2026. The representative entity files for all Israeli entities if one is named. | Minimum Corporate Tax Law 5786-2025 s. 4, 10 and 19, Sefer HaChukim 3476 (Knesset) |
| 12 | Domestic top-up tax payment Paid by the return date, 15 months after the tax year end (Minimum Corporate Tax Law s. 8(a) and (b)). Tax paid late carries linkage differences and interest (s. 8(d)). Advance payments do not apply, unless the Minister sets them later (s. 8(g)). Tax not paid by a representative entity can be collected from it or from any Israeli entity of the group (s. 8(f)). The tax is treated as tax under the Ordinance for payment and collection (s. 8(e)). | Starts with years ending on or after 2026-12-30 | Israeli constituent entities that owe the individual top-up tax or their share of the group's Israeli top-up tax, or the representative entity for all of them. | Minimum Corporate Tax Law 5786-2025 s. 8, Sefer HaChukim 3476 (Knesset) |
Official texts
#- Income Tax Ordinance (New Version) 5721-1961, the Income Tax (Determination of Market Conditions) Regulations 5767-2006 as amended in 2022, and the Minimum Corporate Tax in a Multinational Group Law 5786-2025 (gov.il, Knesset) (Free of copyright: laws, regulations, Knesset proceedings and court decisions are not protected (Copyright Act 5768-2007 s. 6, Official publications))