Israel approves tax rule changes for greater transparency of multinationals

Country-by-Country Reporting will enable authorities to share and receive information from other countries to better determine how much large companies should be taxed

The government voted Sunday for Israel to join an international scheme for tax reporting aimed at creating greater transparency around the taxes paid by multinational companies in the various countries where they operate.

Finance Minister Avigdor Liberman was behind the drive for Israel to embrace the so-called Country-by-Country Reporting, which is recommended by the Inter-governmental Organisation for Economic Co-operation and Development.

A proposed change in tax law regulations will require multinational companies with an annual turnover of more than 850 million euros ($1 billion) to provide a complete breakdown of their actions in each country. Countries that are part of the program share the information they receive with each other.

The information would enable tax authorities to better determine the amount of tax the companies should be paying in each territory.

The OECD called for the Country-by-Country Reporting as part of its Base Erosion and Profit Shifting (BEPS) agenda to prevent multinational companies from exploiting gaps and discrepancies between the tax systems in different countries.