The new amendment to the “Law for the Encouragement of Capital Investments” approved by the Knesset under the “Arrangements Law” states that large companies (namely those whose business turnover exceeds NIS 10 billion) will be required to pay Corporation Tax at a rate of 6% and a tax on dividends at 4%. On the other hand, small high-tech companies will be required to pay Corporation Tax at the rate of 12% with the tax rate on dividends also at 4%.
Several international tax treaties of which Israel is a member incorporate the term ‘permanent establishment’. The term bears practical significance in matters concerning immigrant and returning resident tax. But what is a ‘permanent establishment’? By which criteria will a given establishment be defined as such? What should immigrants be aware of? What are they to take into account when relocating their business to Israel?