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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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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More

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The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.

This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.

Chapter II: Objection and Appeal

Right of Objection before the Assessing Officer§

150.
(a)Where a person disputes the assessment, he may request the assessing officer, by written notice of objection, to reconsider and amend the assessment; such a request shall set out precisely the grounds for objecting to the assessment and shall be submitted within thirty days of the date of service of the notice of assessment, except that if it has been proved to the satisfaction of the assessing officer that the person disputing the assessment was prevented from submitting the request within that period by reason of absence from the country, illness or any other reasonable cause, he may extend the period as seems reasonable in the circumstances.
(b)Where a taxpayer has not submitted a return for a particular tax year and an assessment has been issued for him under section 145(b) for that year, only a return submitted by him for that year shall be regarded as an objection to that assessment, unless it has been proved to the satisfaction of the assessing officer that the taxpayer was not required to submit the return or that it could not have been submitted.

Hearing of the Objection§

150a.

The person who made the assessment shall not hear the objection thereto.

Powers of the Assessing Officer in an Objection§

151.

Upon receipt of the notice of objection referred to in section 150, the assessing officer may require the objector to furnish him with any particulars that appear to the assessing officer to be necessary in respect of the income of a taxpayer and to submit to him any books or other documents in his custody or possession relating to that income, and he may summon any person who, in his opinion, is able to give evidence in the matter of the assessment to appear before him and examine that person on oath or without oath, provided that an officer, authorised agent or employee of the taxpayer, or any other person employed in his affairs on the basis of personal trust, shall not be examined except at the request of the taxpayer; nothing in this section shall derogate from any power of examination under any other law.

Agreement or Decision on Objection§

152.
(a)Where a taxpayer objecting to an assessment made for him has reached an agreement with the assessing officer as to the amount on which he is to be assessed, the assessment shall be amended accordingly and a notice of the tax he is to pay shall be served on the taxpayer.
(b)If no agreement has been reached, the assessing officer shall determine the tax by a written Order, and he may confirm, increase or reduce the assessment.
(c)If within four years of the end of the tax year in which the return was submitted under section 131, or within one year of the date on which an objection was filed, whichever is the later, no agreement as stated in subsection (a) has been reached and the assessing officer has not exercised his powers under subsection (b), the objection shall be deemed to have been accepted; however, an objection filed against an assessment made under section 145(b) shall be deemed to have been accepted only if the assessing officer has not exercised his powers as stated in this section within five years of the end of the tax year in which it was filed.

Right of Appeal§

153.
(a)A person who considers himself aggrieved by a decision of the assessing officer under section 152(b) may appeal to the District Court in whose jurisdiction the assessing officer operated.
(b)The appeal shall be filed and heard in accordance with the provisions of the Ordinance and in accordance with the rules of procedure made thereunder, and the assessing officer shall be the respondent in the appeal.

Appellate Court§

154.
(a)Appeals under section 153 shall be heard before one or more judges, as the President of the District Court shall determine generally or for the purposes of a particular appeal.
(b)At the request of the appellant, the court before which an appeal has been filed may direct that the appeal, or a particular stage of the hearing thereon, be heard at the seat of another District Court.
(c)Every appeal before the District Court under this Chapter shall be heard in camera, unless the court has directed otherwise at the request of the appellant.

Burden of Proof§

155.

The burden of proof that the assessment is excessive shall be on the appellant; however, if the appellant maintained acceptable books, and in an appeal under section 130(h) where the account books were audited by an auditor and the auditor's opinion on the financial statements prepared on their basis was without reservation or with a reservation that in the opinion of the court is of no consequence for the purpose of the admissibility of the books, the assessing officer or the Director, as the case may be, shall be required to justify their decision.

Powers of the Appellate Court§

156.

The court shall confirm, reduce, increase or set aside the assessment, or shall decide the appeal in such other manner as it sees fit, and notice of the taxable income and of the amount of tax that the appellant is to pay – in accordance with the decision of the court – shall be given to both parties.

Appeal before the Supreme Court§

157.

A decision of the District Court under section 156 is appealable before the Supreme Court sitting as a court of civil appeals.

Regulations for Rules of Procedure in Appeals§

158.

The Minister of Justice may make Regulations of procedure with respect to any matter relating to the filing of appeals under sections 153 to 157 and the hearing thereof, including payment of court fees, the giving of security, deposit with the court and the submission of evidence.

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Chapter Two-A: Hearing and Reasoning to the Best of Judgement

Hearing of Arguments and Giving of Reasons§

158a.
(a)No assessment shall be made according to best judgment under section 145, and no Order shall be given under section 152, without the taxpayer having been given a reasonable opportunity to state his case.
(b)In the notice of assessment or in the Order referred to in subsection (a), the assessing officer shall detail, in addition to the reasons for not accepting the return or the objection, also the method by which the assessment was made.
(c)The provisions of subsections (a) and (b) shall not apply if the taxpayer has not submitted a return as referred to in sections 131, 135, 161, 166, 171 or 181b.

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Chapter Two-B: Tax Ruling

Definitions§

158b.

In this Chapter –

"tax laws" – any of the following:

(1)this Ordinance;
(2)the Value Added Tax Law;
(2a)the Customs Ordinance;
(2b)the Purchase Tax (Goods and Services) Law, 5712-1952;
(2c)the Customs Tariff and Exemptions Ordinance, 1937;
(3)the Real Property Taxation Law;
(4)the Inflation Adjustments Law;
(5)the Capital Investment Encouragement Law;
(6)the Capital Investment in Agriculture Encouragement Law, 5741-1980;
(7)the Industry Encouragement (Taxes) Law, 5729-1968;
(8)any provision concerning tax in a law or by virtue thereof, relating to one or more of the enactments listed in paragraphs (1) to (7);

"tax ruling" – a decision in all matters concerning the tax liability of an applicant, the tax result or the effect on the applicant's tax liability, in respect of a transaction the applicant carried out or in respect of income, profit, expenditure or loss the applicant had;

"tax ruling by agreement" – a tax ruling given by way of agreement with the applicant;

"applicant" – a person who requested the Director to give a tax ruling, pursuant to the provisions of this Chapter;

"tax" – a tax imposed under any one of the tax laws;

"transaction" – including a deal and a sale;

"profit" – including real property appreciation.

Powers Regarding a Tax Ruling§

158c.
(a)The Administrator may, at the request of an applicant, give a tax ruling, and he may also give a tax ruling by agreement.
(b)Where a request for a tax ruling has been submitted, the Administrator may make the giving of the ruling conditional upon the addition of another person as an applicant, and he may also refuse to give a tax ruling or determine that a response to the request shall be given by the assessing officer otherwise than by way of a tax ruling.
(c)A decision under subsection (a) may be limited in time and subject to other limitations or conditions, as specified therein.
(d)No decision under subsection (a) shall be given unless the applicant has been given a reasonable opportunity to state his case.
(e)Against a tax ruling by agreement there shall be no appeal; against a tax ruling not by agreement an appeal may be filed as part of an appeal or appeal against the assessment.

Application for a Tax Ruling§

158d.
(a)An application for a tax ruling, other than an application in a matter of tax under the Value Added Tax Law or under the Land Taxation Law, may be submitted before or after the time of carrying out the transaction, provided that it is submitted before the date prescribed in sections 132 or 133 for the submission of a return under section 131 in which the transaction, income, profit, expenditure or loss that is the subject of the application has been taken into account.
(b)An application for a tax ruling in a matter of tax under the Value Added Tax Law or under the Land Taxation Law shall be submitted before the time of carrying out the transaction that is the subject of the application.
(c)The application shall include all the material facts and particulars relating to it, and there shall be attached to it all documents, approvals, opinions, declarations, valuations, contracts, and where contracts have not yet been signed – their drafts, and any other material particular, as prescribed by the Administrator, and there shall be attached to it confirmation of payment of the fee prescribed under section 158e.
(d)The Administrator may require any particular or document that appears to him to be necessary for the purposes of his decision on the application.
(e)Where the name and identity number of the applicant have not been set out in the application, these particulars shall be provided at a later stage, and no tax ruling shall be given before they have been provided.
(f)The applicant shall not be entitled to withdraw his application before the giving of the decision, except with the approval of the Administrator.
(g)Where other provisions have been prescribed in the tax laws with respect to an application for a tax ruling by the Administrator, the provisions of this Chapter shall apply, with the necessary modifications, insofar as they are not inconsistent with the other provisions.

Application Fee§

158e.

The Minister of Finance, with the approval of the Finance Committee of the Knesset, may prescribe a fee for an application for the grant of a tax ruling, in a fixed amount or at a graduated rate and in relation to the value of the transaction or the applicant's income or another criterion.

Additional Provisions§

158f.
(a)Where the Director has given a tax ruling, he shall not be entitled to retract from the decision, unless he has found that a particular detail or document required for the decision was not provided to him, that the circumstances relevant to the decision have changed, or that a false, erroneous or misleading detail was provided to him.
(b)Where the Director has given a tax ruling by agreement, the applicant shall fulfil the conditions and directions prescribed therein, unless the transaction that was the subject of the application was not carried out, or the income was not received or the expenditure was not incurred in respect of which the application was submitted.
(c)Notwithstanding the provisions of the tax laws, the Director may publish a summary of tax rulings he has given, in the manner and form he has prescribed, even if the applicant did not consent thereto; a summary of a decision that has been published shall not include the applicant's name or identity number.
(d)The Director may prescribe rules with respect to a tax ruling and circumstances in which a decision shall not be given.

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Chapter III: Errors and Refund of Tax

Defects and Errors that Do Not Invalidate§

159.
(a)An assessment, a payment order or any other proceeding purporting to be made in accordance with the provisions of this Ordinance shall not be cancelled, and shall not be regarded as void ab initio or as voidable, by reason of a formal defect, and shall not be vitiated by reason of any error, defect or omission therein, if they are in substance and in effect in conformity with what is stated in this Ordinance, or in any Ordinance amending it, or with the intent and meaning thereof, and if the person assessed or about to be assessed or affected is named therein according to the plain and ordinary meaning of the words.
(b)An assessment shall not be vitiated or affected by reason of any error therein in the name or surname of a person liable to tax, or in the description of the income, or in the amount of tax imposed, or by reason of a discrepancy between the assessment and the notice thereof; provided that the notice of assessment was duly served on the person on whom it is intended to impose the tax and it contains, in substance and in effect, the particulars on the basis of which the assessment was made.

Refund of Excess Tax Following a Return§

159a.
(a)In this section, "linkage differentials and interest" – an addition to the amount in question, equal to that amount multiplied by the rate of increase of the consumer price index during the relevant period, plus interest at the rate of 4% per annum on the amount in question after linkage differentials have been added as aforesaid, or at another rate prescribed by the Minister of Finance with the approval of the Finance Committee of the Knesset.
(b)Where a person has paid tax for a particular tax year, whether by way of deduction or otherwise, in excess of the amount he is liable for under the return he submitted pursuant to section 131, and the return was based on books of account, or on adequate documents – if he is not required to maintain books of account – the balance shall be refunded to him within 90 days from the date on which he submitted the return or on 31 July in the tax year following the tax year in respect of which the return was submitted, whichever is the later, unless in the last tax year for which an assessment was made in respect of him his books of account were found to be inadmissible, and he did not prove, to the satisfaction of the assessing officer, that the reason for the inadmissibility of the books did not exist in the tax year in respect of which the refund is sought.
(b1)Where a person was required to submit a return pursuant to section 131 or pursuant to section 135, prior to the date of refund of the tax balance under subsection (b) (hereinafter – the tax refund date), and did not submit it by the tax refund date, the Director may defer the refund for a period not exceeding 90 days from the date on which the said returns are submitted.
(c)The refund in respect of a balance for the period from the end of the tax year or from the date of payment, whichever is the later, until the date of refund, shall be made with the addition of linkage differentials and interest; in respect of a person who has a special assessment period, the end of the special assessment period shall replace the end of the tax year for this purpose.
(d)Where amounts have been refunded to a taxpayer pursuant to this section and it transpires that he was not entitled to them, they shall be regarded, excluding linkage differentials and interest, as a tax debt owed by the taxpayer from the end of the tax year to which the return on the basis of which they were refunded relates.

Refund of Excess Tax Following an Assessment§

160.
(a)Where it has been proved to the satisfaction of the assessing officer that a person has paid tax for a particular tax year – whether by way of deduction or otherwise – in excess of the amount he is liable for, and the return for that year was submitted not later than the end of six years after it, that person shall be entitled, within one year from the date on which the assessment in which the excess amount was determined was made, or within two years after the end of the tax year in which the tax was paid, whichever is the later, to have the excess payment refunded to him with the addition of linkage differentials and interest as their meaning in section 159a(a) from the end of the tax year in respect of which the return was submitted or from the date of payment, whichever is the later, until the date of refund.
(b)No payment shall be refunded to a person in respect of a tax year for which he has not submitted a return, or has neglected to submit one, or for which he was assessed in an amount exceeding the amount in his return and received notice of the assessment made in respect of him for that year, unless he has proved to the satisfaction of the assessing officer that the failure or neglect to submit a true and correct return did not originate in fraud or a wilful act or omission; this provision does not apply to amounts to be refunded following an objection or appeal.
(c)Any person who considers himself aggrieved by the decision of the assessing officer as to the amount to be refunded to him under this section shall have the same right of appeal against the decision as he would have had if he had considered himself aggrieved by an assessment made in respect of him.

Deferral of Tax Refund in Assessment Proceedings§

160a.
(a)Notwithstanding the provisions of sections 159a or 160, the assessing officer may defer the refund of tax paid in excess of the amount the taxpayer is liable for under the return or assessment, as referred to in those sections, up to half the amount due to the taxpayer as aforesaid or up to the amount in dispute, whichever is the lower, if the assessing officer has directed that the return be examined.
(b)The deferral of the tax refund as referred to in subsection (a) shall apply for up to 90 days from the date of receipt of the return; however, if the assessing officer determined the assessment according to his best judgment as referred to in Chapter I of Part 9, before 90 days as aforesaid have elapsed, he may defer the refund up to half the amount of tax he determined in the assessment as aforesaid, for an additional period of 90 days, and if an objection was submitted pursuant to section 150 – for an additional period not exceeding 180 additional days from the day on which the objection was submitted.
(c)Where a decision on the objection was given pursuant to section 152 within 180 days from the date it was submitted, the assessing officer may defer the tax refund up to the amount of tax determined in the assessment as aforesaid, until the date on which the tax debt under the assessment he determined may be collected pursuant to the Tax Collection Ordinance, unless a court before which an appeal has been submitted pursuant to sections 154 or 158 has determined otherwise.

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