Israel Tax Agency Explains Treatment of Income From Cloud Services Under Capital Investment Encouragement Act

Oct. 26, 2020, 5:00 AM

The Israeli Tax Authority Aug. 25 issued Tax Ruling No. 4668/20, explaining the treatment of income from cloud computing services under the Capital Investment Encouragement Act. A resident company provided the cloud computing service, platform as a service (PaaS), and used self-developed proprietary software to offer other services on the platform, including data storage and management. The company inquired whether its income from cloud computing services constitutes preferred technological income under the Act. The tax authority ruled that: 1) the company qualifies as a preferred technological plant under the Act; 2) income from sales of the right to use the ...

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