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Israel: Master File Requirements Finalized; Changes to Local File

8 September 2022

Dear Clients, Friends and Colleagues,

On September 7th, the Finance Committee of the Knesset (the Israeli Parliament) finalized the approval of changes to the Israeli Tax Ordinance (the “Ordinance”) and to the Israeli transfer pricing regulations (the “Regulations”) to include Master File and Country by Country Report (“CbCR”) concepts, as well as updated other reporting obligations in Israel.

As previously published, our firm, represented by our Head of Transfer Pricing, Adv. (Economist) Eyal Bar-Zvi, participated on behalf of the Israeli Bar in the recent discussions held by the Finance Committee with respect to the amendment of the Ordinance, as well as of the Regulations. The following key points were finalized and approved by the Committee and are thus coming into effect as of FYE 2022:

Master File:

  • Master File Threshold: The Finance Committee settled that the threshold will be NIS 150 million, the current equivalent of Euro ~44 million. Note that this requirement applies to an Israeli parent as well as to an Israeli subsidiary even if the parent company’s jurisdiction does not require a Master File;
  • The Master File template generally follows the OECD Master File template, however with some adjustments for Israeli companies, which widen the reporting scope, including but not limited to: (i) the group’s organizational charts (indicating geographic location of employees); (ii) description of the group’s service agreements; (iii) description of changes to the group’s shareholders; (iv) description of the supply chain surrounding the group’s five largest revenue generating products or services;  etc.


TP Documentation Study (local file):

  • TP documentation will be required to be submitted within 30 days of request by the Israeli Tax Authorities (“ITA”), as customary in other jurisdictions. In this respect, the ITA expects that TP documentation will be in place and updated periodically, as the TP study is the basis for annually filing Form 1385 (and 1485 if relevant);
  • In addition to the current requirements in the TP documentation, the following details were added as required in each TP study:
    A table depicting the senior level job descriptions and group / company structure, without the names. However, the companies will also be required to detail where the senior officials are physically located (which country);
    o A list of the entities’ competitors;
    o A description of the main agreements.



  • CbCR requirements have also been incorporated.



  • The changes being made with respect to the Master File and CbCR will be with respect to 2022 documentation that will be prepared in 2023. Note that the requirement of 2022 documentation is based on surpassing the threshold in 2021.


The foregoing is a general description only. Please contact us for any further inquiries. Our firm’s transfer pricing department specializes in preparing Israeli (and foreign) documentation studies, Master Files and Local Files.

Herzog Fox & Neeman

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