Client updates /  Israel Tax Authority

As of 2025, an additional 2% surtax will be imposed specifically on taxable capital income (income from dividends, interest, capital gains from real estate sales and other capital sources) exceeding the maximum of ILS 721,560. This means that taxable capital income exceeding the maximum will now be subject to an inclusive surtax of 5%.

After lengthy discussions, the Knesset approved a wartime compensation outline for businesses. The outline offers compensation of up to a maximum of ILS 1.2 million to businesses with annual turnovers ranging between ILS 12,000 and ILS 400 million.

Preparing reports on an accrual basis and adjusting them to a cash basis for tax purposes was an acceptable practice until the Israel Tax Authority (the “ITA”) determined otherwise. However, many companies still prepare two sets of reports, sometimes resulting in problems with the ITA.

In 2017, the Israel Tax Authority published a circular addressing the use of accumulated balances in central severance pay funds, and many employers began liquidating these severance pay funds. It is important to note that the liquidation of a central severance pay fund also has implications on labor relations with your employees.