Worldwide Tax Summaries--LSRAEL(1999-2000)(part1)(二)

Worldwide Tax Summaries--LSRAEL(1999-2000)(part1)(二)

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TAX INCENTIVES
Inward investment/"Approved enterprise" status, which provides for cash and tax benefits, may be granted to enterprises that increase the productive capacity of the economy, improve the balance of payments or provide new employment opportumities, The status is granted mainly to manufacturing and tourism enterprises. Approved enterprises with significant foreign investment are entitled to increased benefits (see "Capital investment" below).

Free export-processing zones are to be set up in national priority zones, providing tax holidays of 20 years on undistributed profits (with a possible extension of a further 20 years) and 15% tax on distributed profits and capital gains. Exemptions from indirect taxes will also apply. Eligible entities are private entities whose main activity is producing or providing services for export and that do not engage in retail sales in the free zone or elsewhere in lsrael. Services provided by financial institutions other than office administration or assoCIAted services are excluded.

A general condition of approval is that a minimum of 30% of the investment in fixed assets must be equity-financed.

Capital investment/Approved enterprises are entitled to cash grants of up 24% of the amount of the investment for purchases of fixed assets in specified areas of the country.

Reduced tax rates/

General Companies enjoy reduced tax rates on income derived from an approved enterprise. The reduced tax rates are generally applicable for a 7-year benefit period (or a 10-year period in the case of a foreign investors company; see below), commencing with the year in which the approved enterprise first generates taxable income. Generally this period of benefits cannot extend beyond 12 years from the year the enterprise commenced its operations or beyond 14 years from the year in which the approval of its status as an approved enterprise was granted, whichever is earlier. These limitations may be extended in speCIAl cases.

Locally owned companies Income derived by a company from an approved enterprise during the seven-year period of benefits is generally subject to company tax at a rate of 25%; lower rates may be applicable to a "foreign investors'company," as discussed below. An approved enterprise located in Area A is entitled to a tax holiday from company tax for its first two years (for enterprises approved after 1996).

A reduced withholding tax rate of 15% applies to dividends paid by an lsraeli company from profits of an approved enterprise earned during the benefits period noted above if distributed either during the benefits period or during the 12 following years.

Consequently, the effective overall rate of lsraeli tax on profits earned by an approved enterprise during the period of benefits will be 25% if retained by the company or 36.25% if distributed to a shareholdre. Foreign shareholders resident in certain tax-treaty countries may sometimes, depending on the treaty provisions, enjoy a lower withholding tax rate on dividends.

SpeCIAl rules govern the allocation of taxable income of "mixed
enterprises." These are essentially entities that derive only part of their income from an approved enterprise or that operate under a number of approvals relating to separate investment projects. The company tax payable in respect of income from each part of a mixed enterprise is separately computed, and a composite withholding tax rate is applicable to dividends distributed by a mixed enterprise.

Foreign investors' companies Israeli incorporated company: An lsraeli incorporated company that qualifies as a foreign investors' company (FIC) is entitled to enhanced tax benefits on approved enterprise income. In general, an FIC is a company more than 25% of whose share capital (in terms of rights to shares, profits, voting, and the appointment of directors) and combined share capital and investor loan capital is owned by foreign residents. An FIC benefits from reduced company tax on the profits of an approved enterprise for a period of 10 years (instead of 7 years), commencing with the first year in which taxable income is generated. The total period of benefits continues to be restricted, so that it cannot extend beyond 12 years from the year in which operations commence or 14 years from the year in which the approval was granted, whichever is earlier. In addition, an FIC enjoys reduced company tax rates applicable to its approved enterprise income, as shown below.

            PERCENTAGE OF FOREIGN OWNERSHIP                      
                                               COMPANY TAX RATE
                                        
                                                %
    Over 25% but less than 49%……………………………………        25
    49% or more but less than 74%……………………………………    20
    74% or more but less than 90%……………………………………    15
    90% or more………………………………………………………………    10

Dividends paid by an FIC our of profits of its approved enterprise are taxed in the hands of the recipient at the rate of 15%, without limitation as to their distribution date, provided the dividends are distributed out of approved enterprise profits derived during the benefits period.

Foreign incorporated company:When a foreign company owns an approved enterprise in lsrael, the enterprise's profits may, in principle, be subject to the reduced company tax rate of 10%, i.e., the rate at which a 90% or more owned FIC would be taxed with respect to its approved enterprise income.

In addition, a foreign resident company that owns an approved enterprise may be liable to a branch tax at the rate of 15% of the profit after company tax. The Income Tax Commissioner may allow payment of the branch tax to be deferred, so long as it can be proved that the relevant income has not been remitted abroad.

Alternative system of tax benefits for approved enterprises (tax holiday)/

Companies with new or expanding approved enterprises may elect to forgo all government cash grants (see above) and to receive instead a total exemption (i.e., a tax holiday) from company tax on undistributed profits of the approved enterprise for ten years in Development Area A,, for six years in Development Area B and for two years elsewhere in lsrael.

After the tax holiday period, for the remaining period of benefits, the company's income will be subject to the reduced tax rates that would have been applicable if the tax holiday had not been elected.

The tax holiday provides an lsraeli tax exemption as long as the approved enterprise profits generated in the exempt period are retained within the company. If those profits are subsequently distributed, company tax and dividend withholding tax will be imposed on the income distributed, at the rates that would have been applicable if the tax holiday had not been elected. Under certain antiavoidance provisions applicable to tax holidays, amounts paid or credited directly or indirectly by an approved enterprise to a relative, a major shareholder or a related entity controlled by either a relative or a major shareholder may be treated as a taxable distribution of profits by the approved enterprise unless those amounts are otherwise taxed in the hands of the recipients.

Other incentives/Ports in Haifa, Ashdod and Eilat have been declared free-port zones, and investors in authorized enterprises in these ports may receive direct and indirect tax benefits. Further, lsrael has concluded free-trade agreements with the united States, the European Union and EFTA.

WITHHOLDING TAXES

RECIPIENT                                       
                                DIVIDENDS(1)    INTEREST    ROYALTIES
                                        
                                      %         %        %
Resident corporations……………………0/25    0-45        0-20
Resident individuals……………………… 25    0-45        0-30
Nonresident corporations and individuals:
Nontreaty……………………………………    25    25        25
Treaty:        
    Austria………………………………    25    15        10
    Belgium…………………………………15    15        10
    Canada…………………………………15    15(2)            15(2)
    China,P.R. ……………………………10    10(3)        10
    Czech Republic………………………5/15    10/0        5
    Denmark…………………………………25    25        10
    Finland…………………………………25    25        10
    France…………………………………5/15(4)    5/10(5)        10(6)
    Germany…………………………………25    15        5(7)
    Greece…………………………………25    10        10
    Hungary…………………………………15/5    0        0
    India………………………………… 10    10/0        10
    Ireland, Rep. of……………………10    10(5)             10
    Italy……………………………………25    15        0
    Jamaica………………………………22.5/15    15/0        10
    Japan…………………………………15/5    10        10
    Korea, Rep. of…………………5/10/15(8)    10/7.5(9)    2/5(10)
    Netherlands…………………………15/5(11)    15/10(9)    5(12)
    Norway…………………………………25    25        10
    Philippines…………………………10/15(13) 10(14)        15(15)
    Poland…………………………………10/5    5        10(16)
    Romania………………………………15    10/5        10
    Singapore………………………………0    15        0(17)
    South Africa…………………………25    25        0(2,18)
    Sweden…………………………………0    25        0
    Thailand……………………………10/15(19)    15(20)        15(21)
    Turkey…………………………………10    10        10
    United Kingdom………………………15(2)    15(2)        0(2,22)
    United States…………………25/12.5(23)    17.5(24)    15(25)

Notes:The numbers in parentheses refer to the notes below.
1.Dividends out of the profits of approved enterprises are liable to 15% withholding tax, subject to treaty provisions.

2.The reduced tax rate is applicable only if this income is liable to tax in the recipient's country of residence. Otherwise it is subject to the regular withholding tax rate.

3.7% rate for recipient that is a bank or finanCIAl institution.

4.The 5% rate applies if the direct benefiCIAry is a company that holds directly or indirectly at least 10% of the capital of the paying company. However, where the paying company is lsraeli resident and the dividend payment consists of profits liable to a reduced rate of tax in lsrael, a 10% rate will still apply.

5.5% rate applies to sale on credit of industrial, commerCIAl or scientific equipment, in connection with sales on credit of any merchandise by one enterprise to another enterprise or to loans from bank institutions.

6.No withholding tax on a royalty arising from the use of or the right to use literary, artistic or scientific works.

7.No withholding tax on royalties in respect of literary, dramatic, musical, or artistic works.

8. 5% rate applies when recipient owns at least 10% of the capital of the payer and the dividend is paid out of income that is subject to the normal tax rates in the country of the payer. 10% rate applies when recipient owns at least 10% of the capital of the payer and the dividend is paid out of income that is subject to a reduced tax rate in the country of the payer.

9.The lower rate applies to a recipient that is a bank or finanCIAl institution.

10. 2% rate will apply to royalties on industrial, commerCIAl and scientific equipment.

11. 5% rate applies when recipient is a corporation owning at least 25% of the capital of the payer, unless the payer is subject to a reduced tax rate under lsraeli investment law, in which case a 10% rate applies.

12. 10% rate will apply to royalties relating to cinema, radio or television films and tapes.

13. 10% rate applies when recipient owns at least 10% of the capital of the payer.

14.No withholding tax on interest payments to certain finanCIAl
institutions that will be decided between the treaty countries.

15.A lower withholding tax rate will apply in the case of a lower royalty tax rate in the Philippines derived by a third-country resident.

16. 5% rate will apply to royalties on industrial, commerCIAl and scientific equipment.

17.Royalties are subject to tax only in the country in which they are received, at a maximum rate of 15%.

18. 15% rate will apply to royalties relating to cinema or television films.

19. 10% rate applies when recipient owns at least 25% of the capital of the payer.

20. 10% rate for recipient that is a bank or finanCIAl institution.

21. 5% withholding tax on a royalty arising from the us of or the right to use literary, musical, artistic, or scientific works, excluding cinema, radio and television films and tapes.

22.Company tax on up to 15% of the royalties relating to cinema or television films.

23. 25% rate applies to payments to individuals and to companies where the receiving company did not hold at least 10% of the voting shares of the paying company from the beginning of the previous tax year or, generally, more than 25% of the gross income of the paying company in the previous tax year consisted of dividend or interest incom. Payments out of the income of an approved enterprise will attract 15% tax.

24. 10% rate applies to loans from banks, insurance companies or savings institutions.

25. 10% rate applies to copyright and film royalties.

TAX ADMINISTRATION
Returns/The tax year is generally the 12 months ending December 31 in each year. Certain entities may apply to have their tax year end on different dates, specifically, mutual funds, government companies, quoted companies, and subsidiaries of foreign quoted companies.

The lsraeli system is based on a combined form of assessment and self-assessmen

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北京中立诚会计师事务所简介下载
地 址:北京朝阳区北苑路13号领地OFFICE大厦B座7层701室
电 话:(010)- 52086638 51095615
传 真:(010)- 52086636
邮 编:100107
E-mail:supercpa@163.com