OrdinanceTax Law
Income Tax Ordinance [New Version]
פקודת מס הכנסה [נוסח חדש]
Published: 1961-04-25Last amended 2026-06-08✓ Amendment status checked against the Knesset legislation record on 2026-09-04
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Chapter II: Merger of Companies and Co-operative Associations
Exemption from Taxes§
103b.
(a)The sale of rights in a transferring company in the course of a merger, and the transfer of assets or liabilities of a transferring company to an absorbing company in the course of a merger, shall not be subject to tax under this Ordinance or under the Land Taxation Law.
(b)Wherever a sale is not subject to tax on appreciation by reason of what is stated in subsection (a), the sale shall be subject to purchase tax at the rate of 0.5% of its value.
(b1)
(1)Notwithstanding what is stated in subsection (b), where a holder of rights in the absorbing company who was, on the eve of the merger, a holder of rights in a real property association that participated in the merger (in this subsection — the rights holder), sold, during the required period, rights in the absorbing company that were held by him immediately after the merger, in whole or in part, to any of the following (in this subsection — the sold rights), the absorbing company shall be liable to pay the difference in purchase tax in respect of the sold rights, in accordance with the value of the real property held by the real property association on the eve of the merger and in accordance with the rates of purchase tax that applied to an action in a real property association at the time of the merger under the Land Taxation Law, all together with linkage differentials and interest as defined in that Law from the time of the merger until the time of payment:
(a)the absorbing company;
(b)a holder of rights in the absorbing company;
(c)a party related to an entity referred to in sub-paragraph (a) or (b);
(2)The provisions of paragraph (1) shall not apply to the sale of rights in an absorbing company that was, at the time of the sale, a real property association.
Conditions for Entitlement§
103c.
The benefits under this Chapter shall apply with respect to a merger if all of the following conditions are met:
(1)
(a)the companies seek to merge for a business and economic purpose, where the primary objective of the merger is to enable unified management and operation of their activities;
(b)avoidance of tax or improper reduction of tax are not among the primary objectives of the merger;
(2)the majority of the assets transferred to the absorbing company in the framework of the merger from each of the transferring companies, and the majority of the assets that were in its possession on the eve of the merger, were not sold during the required period, and were used during that period in the ordinary course of the company's business, in the circumstances of the matter; for this purpose —
(a)"asset" — an asset as defined in section 104, excluding securities traded on a stock exchange that are not held by controlling shareholders;
(b)"majority of the assets" — assets whose market value at the time of the merger exceeded 50% of the market value of all the company's assets at that time;
(c)for the purpose of sub-paragraph (b), at the request of the merging companies, assets whose sale the administrator has approved, or categories of assets that the administrator has prescribed, shall not be included in the count of the majority of the assets, all subject to conditions that the administrator has prescribed, including prescribing a percentage higher than the percentage set out in sub-paragraph (b);
(d)for the purpose of sub-paragraph (b), an exchange of assets to which section 96 or section 27 has been applied shall not be regarded as a sale of assets, provided that for the purpose of determining the majority of the assets, the new assets shall be regarded as if they were the exchanged assets;
(e)"sale" — excluding an involuntary sale;
(3)in the absorbing company, during the required period, the principal economic activity that existed in each of the merging companies on the eve of the merger continues; for this purpose, an economic activity shall be regarded as an activity whose income is or is expected to be subject to tax, as the case may be, under section 2(1), or whose income is or is expected to be subject to tax, as the case may be, under section 2 excluding paragraph (1) thereof, which the administrator has approved as income arising from an economic activity as aforesaid; a request for approval as aforesaid shall be submitted before the merger;
(4)in the course of the merger, the absorbing company allotted shares of equal rights to all holders of rights in the transferring company in accordance with their proportionate share in the total rights in the transferring company, and no additional consideration whatsoever was given in the course of the merger by the absorbing company or by any other person, whether directly or indirectly;
(5)the rights held in the absorbing company after the merger by all holders of rights in each of the companies participating in the merger are in accordance with the ratio between the market value at the time of the merger of the company of which they were shareholders on the eve of the merger, and the market value at the time of the merger of all the companies participating in the merger; the administrator shall determine the required adjustments where an absorbing company is a shareholder in a transferring company;
(6)
(a)the total rights of all holders of rights in each of the companies participating in the merger at the time of the merger shall constitute at least 5% of the market value of the rights in the absorbing company at that time, provided that if the said total rights, at the time of the merger, amounted to at least 5% and did not exceed 10% of the market value of the rights in the absorbing company, the administrator approved in advance that the merger plan meets the conditions set out in this section;
(b)the market value of each of the companies participating in the merger shall not exceed 19 times the market value of another company participating in the merger, all at the time of the merger, provided that if the said market value, at the time of the merger, was at least 9 times the market value of another company participating in the merger and did not exceed 19 times the market value of that company, the administrator approved in advance that the merger plan meets the conditions set out in this section;
(c)the Minister of Finance may, with the approval of the Finance Committee of the Knesset, prescribe categories of mergers in which different restrictions from those stated in sub-paragraphs (a) and (b) shall apply;
(7)the absorbing company is one of the following:
(a)a resident of Israel incorporated in Israel under the Companies Ordinance, the Companies Law, or a co-operative association incorporated in Israel under the Co-operative Associations Ordinance;
(b)a company approved by the administrator for this purpose, being a company that is a foreign resident or a resident of Israel that is a foreign company as defined in the Companies Ordinance or in the Companies Law; such approval may be made conditional upon the provision of a guarantee and upon other conditions, as the administrator shall determine;
(7a)the reports and documents required to be submitted under section 103s(a) have been submitted;
(8)
(a)all holders of rights in the companies participating in the merger hold together, immediately after the merger, all the rights in the absorbing company;
(a1)(Repealed)
(b)(Repealed)
(9)(Repealed)
(9a)(Repealed)
(10)(Repealed)
(11)(Repealed)
Limitation Regarding Receipt of Cash Consideration§
103d.
(a)Notwithstanding what is stated in section 103c(4) and (5), holders of rights in a transferring company may receive cash consideration from the absorbing company in exchange for their rights in the transferring company, and this shall not have the effect of negating the benefits prescribed in this Chapter, provided that during the merger both of the following occurred:
(1)the rights holders and their relatives sold all their shares in the transferring company;
(2)the rights holders and their relatives did not receive any rights whatsoever in the absorbing company.
(a1)Notwithstanding what is stated in subsection (a), holders of rights in a transferring company may receive, in exchange for their rights, in addition to the shares allotted by the absorbing company in the course of the merger, also cash consideration from the absorbing company, and this shall not have the effect of negating the said benefits in this Chapter, all if all of the following conditions are met:
(1)the administrator's approval therefor was given pursuant to a request submitted to him before the time of the merger;
(2)in the course of the merger, the absorbing company paid to each of the holders of rights in the transferring company cash consideration at an equal rate in accordance with their proportionate share in the rights in the transferring company, not exceeding 49% of the total consideration given to them;
(3)the absorbing company, the holders of rights therein or a party related to them do not hold, on the eve of the merger, rights in the transferring company at a rate of 10% or more;
(4)the transferring company, the holders of rights therein or a party related to them do not hold, on the eve of the merger, rights in the absorbing company at a rate of 10% or more.
(a2)Where cash consideration was received as stated in subsection (a) or (a1) —
(1)the benefits prescribed in this Chapter shall not apply with respect to the rights holders who received consideration as aforesaid, in connection with that consideration, and they shall be subject to the taxes applicable under any law;
(2)the absorbing company shall be liable, with respect to rights in a real property association for which cash consideration was paid, to purchase tax under the Land Taxation Law;
(3)the rights for which cash consideration was paid and their original price shall be calculated in accordance with the ratio between the value of the consideration paid in cash and the value of the total consideration given for all the rights in the transferring company.
(b)The administrator shall determine in rules the adjustments to be made with respect to section 103c(4) and (5) in relation to a merger in which cash consideration was paid as stated in this section.
(c)In this section, "relative" — any of the following:
(1)a relative as defined in section 88;
(2)a person who is a controlling shareholder in a body of persons that is a shareholder in the absorbing company;
(3)a person in whom a shareholder in the absorbing company is a controlling shareholder.
Status of Asset Transferred in Merger§
103e.
(a)The original price of an asset transferred to an absorbing company in a merger and the balance of the original price, the acquisition value and the date of acquisition, all as the case may be, for the purposes of this Ordinance and for the purposes of the Land Taxation Law, shall be as they were in the transferring company had the asset not been transferred, all whether cash consideration as stated in section 103d(a) or (a1) was paid in the framework of the merger or whether no such consideration was paid; with respect to an asset as aforesaid that is inventory, the cost of the inventory shall be regarded as the amount determined as the closing inventory for the purposes of the transferring company's assessment for the tax year ending at the time of the merger.
(b)(Repealed)
Capital Gain from Sale of Shares§
103f.
Upon the sale of shares of the absorbing company that were allotted in the merger (hereinafter — the new share), the following provisions shall apply:
(1)the original price of the new share shall be regarded as the original price of the rights that the transferor held in the transferring company (hereinafter — the old share), adjusted according to the rate of increase in the index from the date of its acquisition until the time of the merger, and after deducting a real loss that would have arisen had the share been sold at the time of the merger, provided that it shall not be less than the original price of the old share (hereinafter — the adjusted price); the difference between the original price of the old share and the adjusted price shall hereinafter be called the "adjustment difference"; for this purpose, "real loss" — the amount by which the market value of the share is lower than its adjusted original price;
(2)the adjustment difference constituting part of the original price of the shares being sold shall be added to the proceeds from the sale of the shares and shall be regarded as an additional inflationary amount;
(3)the date of acquisition of the new share shall be regarded as the time of the merger; however, upon the sale of a new share received in exchange for an old share that was acquired up to the date of change, the date of acquisition of the old share shall be regarded, for the purpose of the charge to tax on real capital gain under section 91(b1) or the charge to tax on real appreciation under section 48a(b1) of the Land Taxation Law, as the date of acquisition of the new share;
(4)where the shareholder was a foreign resident at the time of the merger, and at the time of the sale of the new share requested that the rate of exchange of the currency in which the old share was acquired be regarded as the index for the purpose of calculating the adjusted price, the adjustment difference shall be exempt from tax;
(4a)upon the first sale of the new share by a person who was a holder of rights in the transferring company on the eve of the merger, an exemption from tax as stated in section 97 or under section 105n(a) shall apply only if that rights holder was entitled, prior to the time of the merger, to a tax exemption as aforesaid, had he sold the old share prior to the time of the merger; however, the condition under this paragraph shall not apply to a tax exemption as stated in section 97(a)(5);
(4b)where the rights holder referred to in paragraph (4a) was not entitled, prior to the time of the merger, to a tax exemption as stated in that paragraph, and was entitled to an exemption under section 97(b2) at the time of the sale of the new share, he shall be subject to tax at the rate prescribed in section 91 on that part of the capital gain that would have accrued had the new share been sold before the day on which that rights holder became entitled to a tax exemption under section 97(b2), and not more than the amount of the capital gain at the time of sale of the share;
(4c)for the purpose of the rate of tax applicable upon the sale of the new share by a person who was a substantial shareholder in the transferring company at the time of the merger or at any time in the 12 months preceding the time of the merger, the following provisions shall apply:
(a)that part of the capital gain up to the time of the merger shall be subject to tax at the rate that would have applied had the seller been a substantial shareholder at the time of sale of the new share; for this purpose, "that part of the capital gain up to the time of the merger" — the capital gain, multiplied by the ratio between the period from the date of acquisition of the old share until the time of the merger, divided by the period from the said date of acquisition until the date of sale of the new share;
(b)where the seller was a substantial shareholder in the transferring company at any time in the 12 months preceding the time of sale of the new share, he shall be regarded as a substantial shareholder in the absorbing company for the purpose of that sale;
(5)the administrator shall determine rules for the purpose of determining profits available for distribution as their meaning in section 94b, that were accumulated in the absorbing company or in the transferring company up to the time of the merger, to be calculated in the absorbing company.
Adjustments Regarding Related Companies§
103g.
(a)(Repealed)
(b)The Minister of Finance shall prescribe by Regulations, with the approval of the Finance Committee of the Knesset, the adjustments required with respect to a merger of companies where one of them holds rights in the other company.
(c)Notwithstanding what is stated in section 101(b)(1), the provisions of section 101 shall apply also to shares allotted by the absorbing company, as stated in section 103c(4), pursuant to a prospectus.
Set-off of Losses of Transferring Company and Absorbing Company§
103h.
(a)A loss as stated in section 28 or 29 that a transferring company or an absorbing company had up to the time of the merger and that is available for carry-forward to subsequent years shall be permitted for set-off against the income of the absorbing company commencing in the tax year following the merger, provided that in each tax year no amount exceeding 20% of the total losses of the transferring companies and the absorbing company, or 50% of the taxable income of the absorbing company in that tax year before set-off of losses from prior years, whichever is the lower, shall be permitted for set-off as aforesaid.
(b)A loss as stated in section 92 that a transferring company or an absorbing company had up to the time of the merger and that is available for carry-forward to subsequent years shall be permitted for set-off against capital gain of the absorbing company commencing at the time of the merger, provided that in each tax year no amount exceeding 20% of the total capital losses of the transferring company and the absorbing company, or 50% of the capital gain of the absorbing company, whichever is the lower, shall be permitted for set-off.
(c)
(1)Notwithstanding what is stated in subsection (a), a loss as stated therein that could not be set off in that year by reason of the restriction regarding 50% of the taxable income shall be set off in the subsequent tax years one after another, provided that a loss as stated in this paragraph shall not be set off, together with a loss as stated in subsection (a), in an amount exceeding 50% of the taxable income of the company before set-off of losses from prior years;
(2)Notwithstanding what is stated in subsection (b), a loss as stated therein that could not be set off in that year by reason of the restriction regarding 50% of the capital gain shall be set off in the subsequent tax years one after another, provided that a loss as stated in this paragraph shall not be set off, together with a loss as stated in subsection (b), in an amount exceeding 50% of the capital gain of the company before set-off of losses from prior years.
(d)A loss or capital loss as stated in subsections (a) to (c) that could not be set off until the end of the fifth year following the time of the merger may be set off commencing in the sixth year, subject to what is stated in sections 28, 29 and 92, as the case may be.
(e)Notwithstanding what is stated in subsection (b), a capital loss that one of the merging companies had before the merger may be set off in full against capital gain or appreciation of the absorbing company that arose from the sale of an asset that was, on the eve of the merger, owned by that company, or that the absorbing company had before the time of the merger, as the case may be; the provisions of subsections (c) and (d) shall apply to any balance of the loss that cannot be set off under this subsection.
(f)Notwithstanding what is stated in subsection (a), a loss that one of the merged companies had from the letting of a building before the day of the merger may be set off under section 28(h).
(g)The administrator may determine, during the four-year period referred to in section 103j(b), that a loss or capital loss to which the provisions of this section apply shall not be permitted for set-off in the absorbing company, or that only part of it may be set off, if satisfied that as a result of the merger an improper reduction of tax would be caused by reason of the set-off of that loss; the administrator's determination is appealable and shall be regarded for this purpose as if the benefits had been negated as stated in section 103j(g), provided that if the merging companies requested advance approval from the administrator under section 103i, the administrator must notify his decision under this paragraph together with the giving of the notice under section 103i(e).
(g1)The restrictions on set-off of a loss or capital loss under this section shall not apply to losses as aforesaid of an absorbing company that held, on the eve of the merger, all the rights in the transferring company and whose market value at that time exceeded nine times the market value of the transferring company; the administrator may determine in rules additional circumstances in which the restrictions on the set-off of losses under this section shall not apply.
(h)In this section —
"capital gain" — including appreciation;
"taxable income" — before set-off of losses arising before the time of the merger under this section, but excluding income against which a loss has been set off under section 92.
Advance Approval from the Director for a Merger Plan§
103i.
(a)Where a merger proposal has been submitted to the Registrar of Companies in accordance with Chapter I of Part 8 of the Companies Law, or where an application has been made to the court for a merger order or for approval of the merger by the court, it is possible to apply to the Director and request approval that the merger plan meets the conditions set out in section 103c, provided that the application to the Director was submitted before the merger date.
(b)A person requesting approval under this section shall pay an application fee in an amount to be prescribed by the Minister of Finance by Regulations, and the Minister may prescribe that the fee shall be at a rate of the value of the assets of the merging companies or of their inflation-adjusted equity capital, or according to another calculation.
(c)The application shall include all material particulars and facts relating to the anticipated merger, and there shall be attached to it documents, confirmations, opinions, declarations, valuations, the merger contract or a final draft thereof, the merger application submitted to the court, and any other material particular, all as the Director shall prescribe in rules; the Director may require any additional particular that appears to him to be necessary for the purposes of his decision on the application.
(d)The Director may approve that the particulars of the merger plan meet the conditions set out in section 103c, or that they will meet them if conditions are fulfilled or steps are taken as the Director shall prescribe, and he may also make the granting of the said approval subject to conditions that he shall prescribe.
(e)The Director shall notify the companies of his decision and his reasons within 90 days from the day on which the application and all the documents referred to in subsection (c) were received by him; however, he shall be entitled, for reasons that shall be recorded, to extend the said period to up to 180 days, and with the approval of the Minister of Finance — for an additional period, provided that he notified the companies of the extension before the expiry of the original period.
(f)The Director's decision under subsection (e) may be appealed as if it were an order under section 152(b).
(g)If the Director has not responded to the application within the period prescribed under subsection (e), this shall be deemed a prima facie approval that the merger meets the conditions set out in section 103c.
(h)
(1)Where the Director has approved that the particulars of a merger plan fulfil the conditions prescribed in section 103c, he shall not be able to retract that approval, unless it has become apparent that particulars furnished to him are incorrect or incomplete in a material manner, or that material particulars specified as aforesaid were not fulfilled, or that material conditions imposed by the Director as referred to in subsection (d) were not fulfilled;
(2)The Director's decision to retract an approval may be appealed as if it were an order under section 152(b).
(i)Where the Director has given approval as referred to in subsection (d), the benefits prescribed in this Chapter shall apply from the merger date and for as long as the particulars of the merger plan as submitted to the Director and the conditions prescribed in section 103c have been fulfilled.
Granting and Denial of Benefits§
103j.
(a)Where benefits were granted under this Chapter in a given year, and it subsequently became apparent that a condition of the conditions prescribed in section 103c was not fulfilled in due time, the assessing officer shall notify the parties to the merger accordingly; upon such notice being given, the benefits shall be cancelled retroactively from the time of their granting, and the parties to the merger and their shareholders shall be charged with the taxes and compulsory payments from which they were exempted, together with linkage differentials and interest from the merger date until the date of payment; for the purposes of this subsection, the Director shall prescribe rules for the prevention of double taxation.
(b)
(1)A notice as referred to in subsection (a) and likewise a demand to submit reports from the parties to the merger or from their shareholders (hereinafter — merger reports) shall be given within four years from the end of the tax year in which a report under section 131 was furnished to the assessing officer that concerns the tax year in respect of which the assessing officer claims non-fulfilment of a condition as aforesaid; upon such notice being given, the assessing officer shall make amended assessments for the parties to the merger and for their shareholders, for each of them, not later than two years from the end of the tax year in which a merger report was submitted, or within one additional year if the Director has approved this;
(2)An assessment under this subsection shall have, for the purposes of objection and appeal, the same status as an assessment under section 145.
(c)Taxes, fees and other compulsory payments that the transferring company owes under a tax law within the meaning thereof in the Tax Set-Off Law, 5740-1980 (hereinafter in this section — tax law), in respect of the tax years prior to the merger date, and where the benefits have been denied under subsection (a) — also payments as aforesaid relating to the tax years after the merger date, may be collected from each of the following, in the following order:
(1)from the absorbing company;
(2)from a person who was a controlling shareholder in the transferring company on the eve of the merger and who received, in the framework of the merger, shares in the absorbing company; however, no amount exceeding a proportionate share of the said payments corresponding to his share in the transferring company on the eve of the merger, as determined for the purposes of section 103c(4), may be collected from him.
(d)An amount with which a person could have been charged or which could have been collected from him under a tax law but for the merger, the person responsible for the implementation of that law may charge him with or collect from him even after the merger.
(e)Notwithstanding the provisions of subsection (b), if in a given tax year benefits were granted under this Part and in a later tax year a condition of the conditions prescribed in section 103c whose time for fulfilment is in that year was not fulfilled, the Director may determine that the benefits shall not be denied in respect of the merging companies or some of them, or in respect of a particular shareholder, if he is satisfied that the non-fulfilment of the condition was caused by a unilateral act of a minority of the shareholders, without the knowledge or without the control of the majority of the shareholders, or that the non-fulfilment of the condition occurred without the knowledge or without the control of the shareholders.
(f)The Minister of Finance, with the approval of the Finance Committee of the Knesset, may prescribe by Regulations that different results shall apply to different shareholders according to the degree of their responsibility for the non-fulfilment of the condition on account of which the benefits were denied.
(g)A decision to deny benefits under this section may be appealed within the framework of the appeal against the assessment for the tax year, and if no assessment was made for that tax year within one year from the date of delivery of the notice referred to in subsection (b) (hereinafter — the notice date), it may be appealed separately as if it were an order under section 152(b), within thirty days from the notice date.
Application of the Inflation Adjustments Law§
103k.
(a)Terms used in this section that have not been expressly defined in this Ordinance shall be construed as having their meaning in the Inflation Adjustments Law.
(b)An asset that was a protected asset or a fixed asset, as the case may be, and was transferred to an absorbing company in a merger, shall be deemed as such from the date that would have applied in that regard had the asset remained in the hands of the transferring company and not been transferred to the absorbing company.
(c)(Repealed)
(d)For the purposes of calculating capital adjustments as referred to in section 3 of Schedule A to the Inflation Adjustments Law, in the absorbing company, entries made in the books of a transferring company or in reports submitted by it for the period up to the merger date shall be deemed as if they were made in the books of the absorbing company and in the reports it submitted.
(e)The provisions of section 103h shall apply to a balance of an inflation deduction of an absorbing company and of transferring companies, originating in the period ending on the merger date; however, the restrictions prescribed in section 103h shall not apply to a balance of a deduction as aforesaid that was not allowed as a deduction due to the ceiling limitation prescribed in section 7(b) of the Inflation Adjustments Law or due to the provisions of section 7(e) of the Inflation Adjustments Law; for the purposes of this subsection, "taxable income" — as defined in section 7 of the Inflation Adjustments Law.
(f)The Minister of Finance, with the approval of the Finance Committee of the Knesset, may prescribe by Regulations additional adjustments required in respect of Chapter VII 3 of the Capital Investment Encouragement Law and in respect of a person who maintains his books in foreign currency.
Change of Designation of an Asset§
103l.
(a)Where the designation of an asset was changed at the time of its transfer from a transferring company to an absorbing company, the exemption prescribed in section 103b shall not apply in respect of the transfer of that asset, and the provisions of sections 85 or 100 of this Ordinance or section 5(b) of the Land Taxation Law, as the case may be, shall apply as if the asset had been acquired ab initio by the absorbing company.
(b)Where the designation of an asset transferred in the framework of a merger was changed within two years from the merger date, and the amount of tax payable in respect of the sale of such an asset is less than the total tax amount that would have been payable at the merger date and at the time of the sale had the change of designation been made at the merger date, it shall be deemed as if the designation was changed at the merger date, and the tax applicable as a result thereof shall be paid together with linkage differentials and interest from the merger date until the actual date of payment.
103m.§
(Repealed — תשע״ז־17)
Advance Payments of an Absorbing Company§
103n.
(a)The tax advance payments that an absorbing company is liable for in the tax year commencing on the merger date shall be calculated according to the advance payments that the transferring company and the absorbing company would have been liable for in that year but for the merger, with adjustments as the Director shall direct.
(b)Where the merger date was at the end of a tax year preceding the year in which the merger order was given, or where the merger date was at the end of a tax year preceding the date on which the merger became an approved merger, the advance payments shall be calculated in accordance with the provisions of subsection (a), commencing from the day on which the merger order was given or the day on which the merger became an approved merger, as the case may be, and until the end of the tax year following that year.
Status of Assets Transferred in a Merger§
103o.
The Director shall prescribe rules in respect of assets transferred in a merger, and he may prescribe that the law applicable on the eve of the merger in respect of depreciation, amortisation and deduction, and the provisions of the Inflation Adjustments Law, shall continue to apply to them even after the merger date, or shall apply with adjustments and modifications as he shall prescribe.
Status of an Employee Who Has Transferred to an Absorbing Company§
103p.
(a)The exemption prescribed in section 9(7a) shall not apply in respect of an employee of a transferring company who transfers to work in an absorbing company as a result of a merger of the companies, and his transfer shall not be regarded as retirement for the purposes of the said section; however, the employee's period of employment at the transferring company shall be taken into account for the purposes of calculating the exemption under the said section at the time of his retirement from the absorbing company.
(b)The Director shall prescribe in rules adjustments in respect of section 102 in connection with an absorbing company, a transferring company and employees, and he may prescribe such adjustments for any other matter in section 102.
Power to Deny Benefits in Certain Circumstances§
103q.
The Minister of Finance may, with the approval of the Finance Committee of the Knesset, prescribe by Regulations circumstances in which the benefits prescribed in this Chapter shall not be allowed, provided that no such prescription shall have the effect of denying the benefits in respect of a merger for which the merger order or the Director's approval under section 103i was given before the publication of the said Regulations.
Regulations Regarding Certain Particulars§
103r.
The Minister of Finance, with the consent of the Minister of Justice, may prescribe by Regulations particulars that must be included in the merger contract and in the memorandum and articles of association of the absorbing company, as a condition for receiving the benefits prescribed in this Chapter.
Reports§
103s.
(a)The merging companies and the holders of rights therein shall submit to the assessing officer, within thirty days from the day on which the merger order was given or from the date on which the merger became an approved merger or from the merger date, as the case may be and as the latest of them, or within sixty days if the assessing officer has approved this in advance, a report that includes all the particulars and facts relating to the merger, directly or indirectly, as well as the merger order, the court's decision with respect to a merger approved by it, the merger contract, confirmations, opinions, declarations, financial statements, a report on the designation of the assets transferred in the framework of the merger, details of the valuations made in preparation for and during the merger, and any other report or particular prescribed by the Minister of Finance by Regulations.
(b)A person who is required to submit a report under this section and has not submitted it shall be deemed as if he had not submitted a report under section 131.
(c)For the purposes of this section, "holders of rights" — excluding holders of rights listed for trading on a stock exchange who are not controlling shareholders.
Merger by Way of Share Exchange§
103t.
(a)For the purposes of this section, "merger by way of share exchange" — a merger as defined in paragraph (2) of the definition of "merger" in section 103.
(b)A merger by way of share exchange shall not be subject to tax under this Ordinance or under the Land Taxation Law if all the conditions prescribed in section 103c are fulfilled in it, with the necessary modifications, provided that the absorbing company holds, immediately after the merger, all the rights in the transferred company that were transferred to it in the course of the merger, and that during the required period the total of such rights held by it shall not fall below 51% of each of the rights in the transferred company.
(b1)A profit or loss arising from the sale of shares of the transferred company by the absorbing company shall not be allowed for set-off in the tax year in which the merger date falls and during the two years following it, against a loss or profit of the absorbing company, all in accordance with section 28, 29 or 92, as the case may be, and in the three years thereafter no profit or loss arising from the sale of the shares as aforesaid shall be allowed for set-off against a profit or loss arising from the sale of assets whose date of acquisition preceded the merger date.
(b2)The provisions of section 103h(g) shall apply in respect of the set-off of a loss or capital loss that the absorbing company had prior to the merger date, with the necessary modifications.
(c)(Repealed)
(d)(Repealed)
(e)The provisions of sections 103b(b) and (b1), 103d, 103e, 103f, 103g, 103i, 103j, 103q, 103r and 103s shall apply in respect of a merger by way of share exchange, with the necessary modifications, unless otherwise provided in this section; provided that for the purposes of section 103e, the rights in the transferred company shall be regarded as the transferred assets.
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