Income Tax Ordinance [New Version]

[a] the amount of actual losses, less the amount recovered in respect of those losses under reinsurance;

[b] management and agency expenses in Israel;

[c] a fair proportionate share of the expenses of the head office situated outside the country.

Notwithstanding the provisions of this Ordinance, a company engaged solely in life insurance or in addition to general insurance (hereinafter — life insurance company), its profits from life insurance business shall be regarded as equal to the amount of the profits as computed under section 49, with the reserves determined according to actuarial computation and with the necessary modifications as the case may require, provided that reserves in an amount exceeding the amount of the reserves computed on the basis of an actuarial computation that is reasonable and appropriate in each and every case shall not be allowed.

Expenses incurred by a life insurance company in acquiring life insurance contracts, including payments to an agent, shall be treated as expenses in the year in which they were incurred or credited to the agent, whether or not the company charged these expenses in its profit and loss account against that year.

A life insurance company that received the majority of its premiums from outside the country shall have as its profits a proportionate share of its total investment income, being in the ratio of the amount of premiums received in Israel to the total premiums received, or its actual investment income in Israel, whichever amount is greater, after there have been deducted from the amount of the profits the expenses of the branch or agency in Israel and a fair proportionate share of the expenses of the head office of the company situated outside the country.

A person who is not a resident of Israel engaged in insurance business and to whom premiums were paid in connection with the insurance of property in Israel, or in connection with insurance against an event that may occur in Israel only, or that were paid by insureds who are residents of Israel, not through a branch or agent in Israel authorised to issue policies in its name — such person shall be deemed to have derived profits in Israel from that insurance business, and the amount of their profits shall be deemed equal to 10% of the total amount of the premiums paid to them as aforesaid; however, if the person has submitted to the assessing officer a report of their profits from the said business and the report satisfies the Director, those profits shall be computed in accordance with the provisions of sections 49 or 50–52, as the case may be.

Notwithstanding the provisions of this Ordinance, for the purposes of sections 9(16b), 17(5a), 45a and 47, an individual who, or whose spouse, served in reserve duty during the period commencing on the 22nd of Tishrei 5784 (7 October 2023) and ending on the 19th of Tevet 5784 (31 December 2023), and who has income from a business or profession, and who paid in the tax year 2024 on their own behalf as a self-employed member to a training fund for the self-employed or to a pension provident fund, may request from an institutional body that amounts paid as aforesaid, in whole or in part, be regarded as if paid in the tax year 2023; for the purpose of section 9(16b), the date of the first payment shall be deemed to be the 20th of Tevet 5784 (1 January 2024). In this section —

"spouse" — as its meaning in the Land Taxation Law;

"institutional body" — as defined in the Supervision of Financial Services (Insurance) Law, 5741-1981;

"training fund for the self-employed" — as defined in section 17(5a);

"reserve duty" — as defined in the Reserve Duty Service Law, 5768-2008.

"member" — in relation to a co-operative kibbutz: an individual who, pursuant to the kibbutz's articles, was subject to the obligations and entitled to the rights of a kibbutz member at the end of the tax year, including a candidate for membership; and in relation to a renewing kibbutz: an individual as aforesaid who has attained the age of 21, excluding a member with economic independence, as its meaning in regulation 10 of the Mutual Guarantee Regulations;

"renewing kibbutz" — one of the following:

"co-operative kibbutz" — an association classified as a "co-operative kibbutz" pursuant to the Co-operative Societies (Types of Associations) Regulations, excluding an association as aforesaid in respect of which the matter stated in paragraph (2) of the definition of "renewing kibbutz" applies;

"Co-operative Societies (Types of Associations) Regulations" — the Co-operative Societies (Types of Associations) Regulations, 5756-1995;

"Mutual Guarantee Regulations" — the Co-operative Societies (Mutual Guarantee in a Renewing Kibbutz) Regulations, 5766-2005.

The value of the supply of livelihood that a co-operative kibbutz has provided, by virtue of membership, to its members and to their spouses and children who are not members shall be regarded as part of the taxable income of the kibbutz and not as the income of the members.

for the purpose of this paragraph, the taxable income in respect of which the kibbutz is entitled to claim a separate computation shall be regarded as the taxable income of the kibbutz, as computed for the purpose of subsection (a), after deducting taxable income that is not income under section 2(1) or (2);

In this section —

"qualifying work" — work in a branch that generates for the kibbutz, directly or indirectly, income under section 2(1), or work in respect of which income under section 2(2) is paid, all provided that it is not work in providing the supply of livelihood to the members of the kibbutz, directly or indirectly;

"kibbutz" — as defined in section 54.

A co-operative kibbutz shall be entitled to the credit points to which its members would have been entitled under section 38 had the maintenance of their children been borne by them.

"qualifying income" — the taxable income of the kibbutz before the deduction under subsection (a) and up to an amount equal to NIS 156,000 per year, multiplied by the number of kibbutz members on whose behalf the kibbutz pays to the training fund for kibbutz members;

"kibbutz member" — a member as defined in section 54, provided that the following conditions are met in respect of them:

"kibbutz" — a co-operative kibbutz;

"training fund for kibbutz members" — a training fund designated for kibbutz members.

"taxable income of a renewing kibbutz" — the taxable income of a renewing kibbutz, including all income taxable at the individual level that was generated by a member of the kibbutz other than from their work within the framework of the kibbutz, and including the tax-exempt portion of income at the individual level that was not transferred to the kibbutz member who generated that income, and the following provisions shall apply for this purpose:

"benefit" — including in money, money's worth, in a product or in a service;

"balance of taxable income of a renewing kibbutz" — the taxable income of a renewing kibbutz less the total of all grossed-up member budgets;

"member's budget" — amounts received by a member of a renewing kibbutz, or received by their relative who is not a member by reason of being their relative, including any taxable benefit under law given to them by their employer or by the renewing kibbutz, excluding a benefit given by the kibbutz to all its members, and excluding amounts exempt from tax at the individual level that were received in respect of that member by the kibbutz; for this purpose, no additional exemption shall be attributed to a member's budget in respect of tax-exempt income originating from the assets of the renewing kibbutz;

"grossed-up member's budget" — the member's budget plus the national insurance contributions under the National Insurance Law [Consolidated Version], 5755-1995, and health insurance contributions as their meaning in the National Health Insurance Law, 5754-1994, that the member would have been liable to pay in respect of the components of the grossed-up budget, plus the amount of tax that they would have had to pay so as to be left with the member's budget, as if that were their sole income; the computation of the addition of the amount of tax, the national insurance contributions and the health insurance contributions as aforesaid shall be made in accordance with the income generated or accrued by that member and the applicable rates of tax.