Israel Tax Agency Announces Proposed Comprehensive Tax Reform for High-Tech Sector

The Israeli Tax Authority Nov. 2 announced proposed comprehensive tax reform for the high-tech sector. The announcement includes measures to: 1) introduce a VAT exemption and uniform tax rates on success fees for foreign and domestic investment funds, a capital gains exemption for certain entities on high-tech investments, and a fixed formula for calculating VAT on management fees; 2) classify Israeli investors’ investments in venture capital funds as passive; 3) set guidelines for determining the value of intellectual property and the pricing method of R&D centers; 4) adopt OECD Pillar Two rules, an incentive mechanism for compliance with international rules, ...