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Tax Windfall for Innovators: R&D Expensing Extended Under New Law

Jan 23, 2024

The Tax Relief for American Families and Workers Act of 2024 (Tax Relief Act of 2024) shines a beacon on innovative businesses of all sizes, extending and expanding crucial tax benefits for research and development (R&D) activities. This legislative boon fosters an environment ripe for groundbreaking advancements, propelling American innovation forward.

Prior to the Shadow:

Preceding the Tax Cuts and Jobs Act (TCJA) of 2017, Section 174 provided companies the flexibility to immediately deduct R&D costs, encouraging investments in the pursuit of new ideas and products. However, the TCJA cast a long shadow, requiring R&D expenses to be capitalized and amortized over five or more years starting in 2022. This heavier tax burden threatened to stifle innovation and hinder the potential of R&D-intensive businesses.

A Lifeline for Innovation:

The Tax Relief Act of 2024 serves as a much-needed lifeline, offering two key advantages:

Hi Tech Taxation

Deadline extension for reporting periods in Light of the "Iron Swords" War

Dec 3, 2023

On November27, 2023, the Knesset plenum approved the "Iron Swords" (ProvisionalOrder – Extension of Periods and Delay of Deadlines) (Tax Procedures andAssistance Grants) Law, hereinafter referred to as the "Law". Butwhat exactly did the Law say? In this article, we will organize and review allthe relevant provisions of the Law.

Purpose ofthe Law

The purposeof the Law is to extend the validity of limited time periods set in tax lawsfor various procedures between taxpayers (the public) and the Israel TaxAuthority.

To implementthe purpose of the Law, it is stipulated that if the start date of the timeperiod for performing a specific action (in accordance with the provisions ofthe existing law), falls before the end of the "determining period"(Section 1 of the Law: a period of three months beginning on October 7, 2023)and the last day for performing the specific action, falls during the"determining period" or within two (2) months after it (Section 2(a)of the Law), then the last day for performing the specific action will bepostponed by three (3) months.


The Interplay of Confidentiality in Tax Law and the Right of Access to Court Files

Sep 1, 2023

The right of access to court files is a cornerstone of transparency andaccountability within the judicial system. However, this right is not absoluteand may be curtailed under specific circumstances, particularly when theinformation contained within the files is of a confidential nature. In therealm of tax law, the duty of confidentiality is a crucial component designedto safeguard taxpayer privacy. Yet, this duty can intersect with the right ofaccess to court files, as these files may encompass sensitive tax-relatedinformation. This paper explores the duty of confidentiality in tax law and itsimplications on the right of access to court files.


The Acquisition of a Loss-Making Company

Jul 30, 2023

The acquisition of a loss-making company can be acomplex and risky proposition. On the one hand, the new shareholders may beable to offset the losses of the acquired company against their own profits, resultingin a significant tax saving. On the other hand, the courts have ruled that theacquisition of a loss-making company must be motivated by legitimate commercialreasons. If the acquisition is simply an attempt to exploit the accumulatedlosses, the offset of these losses will not be allowed.

Corporate Taxation

The Thin Line Between Capital Gain and Business Income in Israeli Law

Jul 28, 2023

The distinction between capital gain and business income is a complex one in Israeli law. The Income Tax Ordinance (ITO) provides a number of definitions for these terms, but the line between them can be blurry. This article explores the key concepts of capital gain and business income, and discusses the factors that courts have considered in determining whether a particular transaction is one or the other.

Individual Taxation

Section 85A of the Income Tax Ordinance – Transfer Pricing in International Transactions between Related Companies

Jul 28, 2023

Transfer pricing (TP) deals with the pricing and review of the pricing of transactions between parties that have special relationships as specified in Section 85A of the Ordinance. In the case of Contara Technologies Ltd., the Supreme Court held that TP refers to the price that a certain company charges another related company for the sale of an asset, right, service, or credit.

Global Taxation

valuing intellectual property (IP) exchanged between related parties.

Jul 22, 2023

In today's fast-paced corporate world, valuing intellectual property(IP) exchanged between related parties frequently creates considerable hurdles.Today, I'd like to throw some light on this essential topic and discuss bestpractices for ensuring a smooth valuation process.

Hi Tech Taxation

Hedge Funds in Israel: Structure, Taxation, and Regulatory Considerations

Jul 11, 2023

Funds of hedge

Unlike other financial instruments such as mutual funds, hedge funds are not limited in their investment methods and are not subject to much regulation. Hedge funds can invest in stocks, commodities, currencies, or any other asset, making them an alternative investment to traditional financial instruments. As a result, the vast majority of hedge funds are registered in offshore jurisdictions, which offer a more favorable tax regime and regulatory environment.

This article focuses on Israeli hedge funds and examines the tax implications of such funds.

Capital Market Taxation

Wind of change – The Israel Committee for International Tax Reform has released its report.

Sep 7, 2022

Wehave recently seen major advancements in technology in all its aspects. Newcompanies and new partnerships are continually being formed to meet the needsof a world hungry for new and revolutionary technologies. Whether it's aservice, a commodity, or information, anyone, or any business in almost anylocation can now take advantage of technological abundance and free- exchange. Unfortunately,with the development of international business and economic models, enforcementproblems have arisen due to aggressive tax planning which has exploited everypotential tax loophole. In view of these difficulties as well as the changes ininternational tax policy as a result of the BEPS project and the ATAD'sEuropean anti-tax evasion regulation. the necessity arises to re-examine Israeli law rulesconcerning international taxation. In relation to this matter, the Director ofthe Israeli Tax Authority, Mr. Eran Yaakov, has formed a committee whose taskis to propose the necessary changes to the Israeli tax laws in the field ofinternational taxation. the committee conducted extensive legal and tax studiesbefore submitting its proposals in November 2021.‍

Global Taxation