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Value Added Tax Law, 5736-1975

חוק מס ערך מוסף, תשל"ו-1975

Published: 1976-01-06Consolidated Hebrew text as of 2026-07-13 · Last amended 2026-03-31✓ Amendment status checked against the Knesset legislation record on 2026-09-29
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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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Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.

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 XII: Determination, Assessment, Objection and Appeal

Tax Determination§

76.
(a)If a taxable person has not submitted a periodic report, the tax that he is required to pay shall be determined having regard to the scope of his transactions or activity, and in the absence of data – according to an estimate (hereinafter – tax determination).
(b)A tax determination may not be objected to or appealed against, and it shall be automatically cancelled if the periodic report is submitted; however, with respect to a person who claims that he is not within the category of taxable persons, the determination shall be deemed, for the purpose of objection and appeal, as an assessment.

Assessment According to Best Judgment§

77.
(a)If a taxable person has submitted a periodic report and in the opinion of the Director the report is not complete or is not correct, or is not supported by documents or books of account as prescribed, the Director may assess according to his best judgment the tax due or the input tax of the taxable person (hereinafter – assessment).
(b)The assessment shall be made within five years after the submission of the report, and if the taxable person has been convicted, or his offence compounded, for furnishing false information in the said report or for another act involving an intention to evade payment of tax due for the period of the said report – within ten years after the submission of the report.
(c)The assessment notice shall detail the reasons for the assessment.
(d)
(1)If a taxable person has submitted a periodic report and the Director finds it appropriate to make an assessment in respect of one or more matters included or that should have been included in the submitted periodic report, he may assess according to his best judgment, in a partial assessment, the tax due or the input tax of the taxable person relating to that matter or those matters (in this subsection – partial assessment), provided that at that time the Director has not determined an assessment for him under subsection (a);
(2)
(a)a partial assessment may be determined only once in respect of the same tax year;
(b)a partial assessment shall not be determined for a taxable person more than three times during five tax years;
(3)The Director shall notify the taxable person in writing of the matter or matters he intends to examine before deciding whether to determine a partial assessment under this subsection;
(4)a partial assessment may be made in accordance with an agreement with the taxable person;
(5)a partial assessment has the same status as an assessment for all intents and purposes, however, a partial assessment shall not derogate from the powers of the Director or from the rights of the taxable person with respect to the assessment of the remaining tax due or the input tax of the taxable person, in accordance with the provisions of this section;
(6)if, in respect of the same reporting period, a partial assessment and an assessment under subsection (a) have been determined, including an assessment determined by agreement or by judgment, the Director shall determine the implications of each upon the other and shall make the required adjustments.

Non-Registration of Receipts and Non-Maintenance of a Cash Register§

77a.
(a)A dealer who records his receipts on a cash register tape, in a receipt voucher, in an invoice, in a daily revenue book, or in another document which he is required to maintain pursuant to instructions made under section 66, and who did not record therein a receipt that he was required to record pursuant to those instructions, his books shall be deemed inadmissible in that tax year, unless the Director was satisfied that there was sufficient reason for the non-recording.
(b)A dealer who records the dispatch of goods in a delivery note, in an invoice or in another document which he is required to maintain pursuant to instructions made under section 66, and who did not record therein the dispatch of goods that he was required to record pursuant to those instructions, his books shall be deemed inadmissible in that tax year, unless the Director was satisfied that there was sufficient reason for the non-recording.
(c)A dealer who, on two or more occasions in one tax year or in twelve consecutive months in two tax years, did not record a receipt or dispatch of goods that he is required to record as stated in subsections (a) or (b), and at least one of those occasions was after the Director had warned him in writing, it shall be presumed that his books are also inadmissible in the two tax years preceding the year in which he failed to record a receipt or dispatch twice as aforesaid, or also in the tax year preceding the first year within the twelve months in which he failed to record a receipt or dispatch twice as aforesaid, as the case may be, even if his reports were accepted and the assessments were made accordingly, unless the Director was satisfied that there was sufficient reason for the non-recording.
(d)A decision of the Director under subsections (a) to (c) may be appealed under section 83 as if it were a decision on an objection, within 60 days from the date on which the notice was given.
(e)A dealer who is required to maintain a cash register tape under this Law or Regulations made thereunder and who did not maintain it, his books shall be deemed inadmissible.

Unlawful Issuance of a Tax Invoice and Unlawful Deduction of Input Tax§

77b.
(a)A dealer who issued a tax invoice unlawfully, his books shall be deemed inadmissible in that tax year.
(b)A dealer who deducted input tax included in a tax invoice that was issued unlawfully, his books shall be deemed inadmissible in that tax year, unless he proved, at the time of presenting his arguments under section 62, to the satisfaction of the Director, that he did not know that the invoice was issued unlawfully.
(c)A decision of the Director under subsections (a) or (b) may be appealed under section 83 as if it were a decision on an objection, within 60 days from the date on which notice of the decision was given.

Determination and Assessment for Several Periods§

78.

A tax determination or assessment may also be made for several reporting periods, even if they are not consecutive.

Amendment of Assessment and Tax Determination§

79.
(a)If the Director is satisfied that a tax determination or assessment is not correct, he may, on his own initiative or at the request of the taxpayer, amend them within five years from the date on which they were made.
(b)A determination or assessment as stated in subsection (a) shall not be amended if seven years have elapsed from the submission of the report, unless the taxable person has been convicted or his offence has been compounded for an act involving an intention to evade payment of the tax due for the period of the said report.
(c)An amended determination has the same status as a tax determination, and an amendment of an assessment, for the purpose of objection and appeal, has the same status as an assessment.

Service of Notice§

80.

Notice of a tax determination, of an assessment, or of their amendment shall be served on the taxable person, by hand or by registered post.

Preservation of Liability§

81.

A tax determination or assessment does not derogate from the obligations of the taxable person or from his criminal liability.

Status of Determination of Turnover of Transactions§

81a.

If the Director has determined that the total price of the transactions of a dealer in the current tax year will exceed the total price of his transactions in the previous tax year, his determination shall be deemed an assessment for the purpose of objection and appeal.

Objection§

82.
(a)A person who disputes an assessment may object to it in a reasoned written statement before the Director, within thirty days after the assessment notice has been served on him or within a later time permitted by the Director for special reasons.
(b)If the taxable person and the Director have reached an agreement regarding the tax due, the assessment shall be amended accordingly; if no agreement has been reached, the Director shall decide on the objection, and he may uphold the assessment, increase it or reduce it.
(c)Notice of the Director's agreement or of his decision on the objection, and the reasons therefor, shall be served on the taxable person.
(d)If the Director has not decided as stated in subsection (b) within one year from the date of submission of the objection, the objection shall be deemed to have been accepted.
(e)The person who made the assessment shall not decide on an objection thereto.
(f)The submission of an objection shall not derogate from the powers of the Director under other provisions of this Law.

Appeal§

83.
(a)A person who considers himself aggrieved by the Director's decision on an objection may appeal against it before the District Court.
(b)The appeal shall be heard before a single judge, who may appoint advisers from a list of advisers determined by the Minister of Justice in consultation with the Minister of Finance; the adviser shall assist the judge in clarifying the appeal at the time of its hearing, but shall not take part in the judgment.
(c)The appeal shall be heard in camera, unless the court has ordered otherwise at the request of the appellant.
(d)The burden of proof is on the appellant if the report is not supported by books of account that were kept in accordance with the law.
(e)The court shall confirm, reduce, increase or cancel the assessment, or shall decide in any other manner as it sees fit.

Procedural Regulations§

84.

The Minister of Justice may make Regulations regarding the manner of submitting an appeal and the procedure thereof, and regarding fees, costs, attendance fees for witnesses and advisers' remuneration.

Payment of Tax Not in Dispute§

85.

No objection or appeal may be made under this Chapter unless the tax not in dispute has been paid.

Dispute Regarding Tax on Import§

86.

If a person disputes the liability to tax on the import of goods, the provisions of section 154(a) and (b) of the Customs Ordinance [New Version] shall apply, with the necessary modifications.

Refund of Excess Tax§

87.

If it becomes apparent in proceedings under this Chapter that tax was paid in excess, the surplus shall be refunded within 30 days after the conclusion of the proceedings, to the extent that it was not deducted as input tax; however, if the Director has ordered an examination of the books of a taxable person, or an investigation has commenced against the taxable person, or an indictment has been filed against him – the provisions of section 39 shall apply to the surplus, as the case may be, as if the excess tax were an excess of input tax.

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Chapter XIII: Time of Payment

Payment According to the Report§

88.
(a)A taxable person shall pay the tax due for the reporting period, whether pursuant to the periodic report or pursuant to the provisional report, upon their submission.
(a1)(Repealed)
(a2)(Repealed)
(b)If the amount of tax paid pursuant to a provisional report is higher than the amount of tax required by the periodic report submitted thereafter, the surplus shall be refunded within 30 days from the date of submission of the periodic report; however, if the Director has ordered an examination of the books of a taxable person, or an investigation has commenced against the taxable person, or an indictment has been filed against him – the provisions of section 39 shall apply to the surplus, as the case may be, as if the excess tax were an excess of input tax.

Payment on Import§

89.

The tax on the import of goods shall be paid at the time of payment of customs duty thereon in accordance with the provisions of section 123b of the Customs Ordinance [New Version].

Payment upon Tax Determination or Assessment§

90.

The tax due pursuant to a tax determination, pursuant to an assessment or pursuant to an amendment thereof shall be paid within one month from the day on which notice thereof was served on the taxable person; the same shall apply to a tax balance resulting from a decision on an objection or from a judgment.

Payment upon Objection and Appeal§

91.
(a)Where an objection or an appeal has been filed, the objector or the appellant may refrain from paying the tax in dispute, and the Director may refrain from refunding the excess tax or the excess input tax in dispute and may also withhold any amount due to the objector or the appellant, as the case may be, under the provisions of this Law, as detailed below:
(1)where an objection has been filed – up to the amount of one half of the sum in dispute;
(2)where an appeal has been filed – up to the amount of the sum in dispute, unless the appellate court has otherwise directed.
(b)A withholding as referred to in this section shall apply until the tax debt may be collected pursuant to the Tax Ordinance (Collection), provided, however, that with respect to a withholding under subsection (a)(1), if no decision on the objection has been given within 90 days from the date of the withholding – the withholding shall be cancelled.

Advance Payments§

92.

The Minister of Finance may prescribe an obligation to make advance payments on account of the tax owed by a financial institution in respect of its profits.

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Chapter XIV: Collection, Fines and Interest

Definitions§

93.

In this Chapter –

"linkage differentials and interest" – an addition to the amount in question equal to that amount multiplied by the rate of increase of the index during the relevant period, plus interest at the rate of 4% per annum on the amount in question after linkage differentials as aforesaid have been added thereto, or at such other rate as the Minister of Finance has prescribed with the approval of the Finance Committee of the Knesset; for this purpose –

"index" – the consumer price index published by the Central Bureau of Statistics;

"rate of increase of the index", in a given period – the difference between the index last published before the end of the period and the index last published before the beginning of the period (hereinafter – the basic index), divided by the basic index.

Fine for Late Filing of a Report§

94.

If a taxable person has not filed, at the prescribed time, a report that is required to be filed under this Law, that person shall be liable to a arrears fine of NIS 239 for every two weeks or part thereof.

Fine for Failure to Keep Books§

95.
(a)If a taxable person has not kept account books or records as prescribed, or has kept them with a material deviation from the provisions of this Law or the Regulations made thereunder, the Director may impose a fine of 1% of the total price of that person's transactions or of the total wages and profit, as the case may be, for the tax year in which the books or records were not kept as prescribed, provided that the fine shall not be less than NIS 359 per month.
(a1)If a taxable person who is a dealer has not kept account books or records as prescribed, including failing to record tax invoices, import declarations or other documents approved by the Director for this purpose, that were lawfully issued to that person and on the basis of which that person was entitled to deduct input tax under section 38(a), or has kept account books or records with a material deviation from the provisions of this Law or the Regulations made thereunder, the subject of which, in whole or in part, is the failure to record documents as aforesaid, the Director may impose on that person a fine at the rate of 30% of the total input tax that was not deducted at the time prescribed in section 38(a) on the basis of the said documents and that was taken into account in a tax assessment or in an appraisal made by the Director under the provisions of Chapter XII or in a supplementary report or in a periodic report filed by the dealer as referred to in sections 71 or 76(b), as the case may be; nothing in the provisions of this subsection shall derogate from the Director's power under subsection (a).
(b)Against a decision of the Director under subsection (a), the taxable person may file an appeal before the District Court or an appeal before the Books Admissibility Committee established under section 127, within thirty days from the day on which the decision was notified to that person; provided, however, that against a decision as aforesaid that was given in respect of the keeping of account books or records with a material deviation, the subject of which is the unlawful issuance of a tax invoice or the deduction of input tax included in a tax invoice that was unlawfully issued, under section 77b(a) or (b), as the case may be, the taxable person may file an appeal within the said period only before the District Court.
(b1)Against a decision of the Director under subsection (a1), a taxable person who is a dealer may file an appeal before the District Court, within thirty days from the day on which the decision was notified to that person.
(b2)Where an appeal has been filed before the District Court under subsection (b1) –
(1)and there is, at that same time, a pending appeal arising from the same circumstances that was filed before the District Court under subsection (b) – the court shall hear the appeals jointly;
(2)and there is, at that same time, a pending appeal arising from the same circumstances that was filed before the Books Admissibility Committee under subsection (b), and the hearing of the parties' arguments in that appeal has not yet concluded – the appeal shall be transferred to the District Court hearing the appeal under subsection (b1), which shall hear them jointly; if the hearing of the parties' arguments in the appeal has concluded but the Books Admissibility Committee has not yet given its decision therein – the District Court shall not commence the hearing of the appeal under subsection (b1) until the Committee has given its decision on the appeal; provided, however, that notwithstanding the provisions of subsection (b), if at the time of filing the appeal under subsection (b1) the appellant has not yet filed an appeal or an appeal under subsection (b), that person shall also file the appeal under subsection (b) before the District Court, which shall hear the appeals jointly.
(c)The filing of an appeal stays the payment of the fine unless the court or the Committee has decided otherwise.
(d)The filing of an appeal under this section does not substitute the filing of an objection under section 82; if the appeal is dismissed, the account books shall be deemed inadmissible for the purposes of the appeal against the appraisal.
(e)A taxable person who has not filed an appeal under this section may appeal against the Director's decision under this section together with the appeal under section 83.

Fine for Failure to Pay on Time§

96.

If a tax has not been paid at the prescribed time, there shall be added thereto, in addition to linkage differentials and interest under section 97, an arrears fine of 1/4% of the amount of the debt in arrears for each week or part thereof in respect of an arrears period of up to six months and 1/2% for each week or part thereof in respect of an arrears period after six months.

Fine in respect of a Reportable Transaction§

96a.

Where a final appraisal that is no longer subject to appeal includes a determination with respect to a transaction that was prescribed under section 67(e) as a reportable transaction, to the effect that it is to be disregarded under the provisions of section 138, a fine shall be imposed at the rate of 30% of the amount of the deficit created as a result of the said transaction; for this purpose, "deficit" – the amount by which the tax that a person is liable for under the said appraisal exceeds the tax that person is liable for under the reports filed pursuant to Chapter XI.

Fine for a Deficit§

96b.
(a)Where a deficit exceeding NIS 500,000 per year has been determined with respect to a taxable person and the said deficit exceeds 50% of the tax that person is liable for, the Director may impose on that person a fine at the rate of 30% of the amount of the deficit if the deficit arises due to one or more of the following:
(1)the taxable person did not report on a transaction prescribed under section 67(e) or 67a(h) as a reportable transaction;
(2)the taxable person acted in a particular matter contrary to an explicit and reasoned tax ruling, as defined in section 158b of the Income Tax Ordinance [New Version], that was given to that person in that matter within the three years preceding the filing of the report under sections 67 and 67a, and did not report, in a form prescribed by the Director, on the fact that that person acted contrary to the tax ruling in that matter.
(3)an opinion, as defined in section 67c, whose recipient did not report on it as required under that section;
(4)a reportable position, as defined in section 67d, whose recipient did not report on it as required under that section.
(b)Where an indictment has been filed against a taxable person on account of one of the grounds listed in subsection (a), that person shall not be liable in respect of the same act to a fine for the deficit, and if that person has paid a fine for the deficit – the amount of the fine paid shall be refunded, together with linkage differentials and interest from the day of payment until the day of refund.
(c)In this section, "deficit" – the amount by which the tax that a person is liable for under an appraisal exceeds the tax that person is liable for under a report filed pursuant to Chapter XI, or the amount of the tax determined under section 76 if no such report was filed, as the case may be.

Linkage Differentials and Interest§

97.

If a tax, double tax or fine under section 95 has not been paid at the prescribed time, or if the Director has deferred payment thereof, linkage differentials and interest shall be added thereto for the period of arrears or deferral, from the expiry of the time for payment.

Coordination of Linkage Differentials and Interest§

97a.

Linkage differentials and interest and a fine in respect of tax paid in arrears that were not paid at the time of payment of the tax shall be regarded, for the purposes of collection and of the addition of linkage differentials and interest thereto, as a tax debt whose due date for payment is the date on which the tax was paid.

Input Tax Refunded in Excess§

97b.

For the purposes of collection and of the addition of linkage differentials and interest or a fine in respect of failure to pay on time, input tax that has been refunded to a dealer in excess shall be treated as tax that the dealer is liable to pay on the day on which it was refunded in excess.

Linkage Differentials and Interest in Special Cases§

98.
(a)Tax due pursuant to a periodic report that was filed as referred to in section 68(c) shall have added thereto, commencing fifteen days from the end of the reporting period, linkage differentials and interest as referred to in section 97.
(b)Tax due in the circumstances referred to in section 90 shall have added thereto, commencing from the expiry of the time for filing the periodic report to which the tax relates, a fine and linkage differentials and interest as referred to in sections 96 and 97.

Liability for Collection Expenses§

99.

Where collection proceedings have been initiated, there shall be added to the debt also the expenses incidental to the demand for payment and the collection thereof, the attachment of goods and their safekeeping and the like, all in the amount prescribed by the Minister of Finance.

Waiver of Fine, Interest or Expenses§

100.

The Director may, for special reasons to be recorded, waive or reduce a double tax, fine, linkage differentials and interest and expenses, and may convert a fine under sections 96 and 98(b) into linkage differentials and interest as referred to in section 97.

Time of Payment§

101.

The fine, linkage differentials and interest, double tax or expenses under this Chapter shall be paid within one month after service of notice of liability therefor.

Methods of Collection§

102.
(a)The Taxes (Collection) Ordinance shall apply to the collection of amounts due to the State Treasury under this Law, and such amounts may also be collected by way of a civil action.
(b)For the purpose of enforcing amounts due to the State Treasury under this Law, pursuant to the provisions of subsection (a), the Director may seize, in accordance with the provisions of section 5(1) of the Taxes (Collection) Ordinance, also a vehicle of the debtor parked in a public place, provided that what is set out below is fulfilled, as the case may be:
(1)the vehicle is parked in proximity to the debtor's premises;
(2)if the vehicle is not parked in proximity to the debtor's premises – the following conditions are fulfilled:
(a)prior to the seizure, the vehicle was registered under a seizure at the Licensing Authority and notice thereof was served on the debtor; for the purpose of such service, the provisions of section 12b of the Taxes (Collection) Ordinance shall apply;
(b)the Director made a genuine effort to notify, shortly before the seizure, the debtor, and if the debtor is a corporation – the person who regularly drives the vehicle, the debtor's representative or the corporation's registered office, of the intention to seize the vehicle;
(c)the vehicle is not registered as a vehicle of a person with a disability according to the registration at the Licensing Authority.

Guarantor for Payment of a Tax Debt§

102a.

Where a guarantee has been given to the Director, by way of providing a surety, to secure the payment of a debt that a person is liable to pay under this Law, as a condition for the extension of the time for payment of the debt in accordance with section 116, the Director may enforce the fulfilment of the guarantee pursuant to the Tax Ordinance (Collection) or through the court competent to do so; provided, however, that proceedings under the Tax Ordinance (Collection) shall not be taken unless all of the following conditions have been met:

(1)the Director is entitled to collect the debt from the debtor under section 102;
(2)there is no impediment to demanding the fulfilment of the obligation from the guarantor under the provisions of the Guarantee Law, 5727-1967;
(3)it was explained to the guarantor, orally and in writing, in a form prescribed by the Director that the guarantor signed, that the fulfilment of the guarantee will be enforced in this manner.

Application to the Registrar for Centre Matters for the Imposition of Restrictions§

102b.

The powers vested in the Registrar for centre matters under section 194a of the Income Tax Ordinance [New Version] shall also be vested in that Registrar with respect to a tax debt under this Law in respect of which collection proceedings have been initiated pursuant to the Tax Ordinance (Collection), and the provisions under that section shall apply for this purpose, with the necessary modifications.

Appropriation of Payment to Prior Debt§

103.
(a)Where a person has paid any amount on account of various sums owed by him under this Law or under the Tax Law (Late Payment Fine), 5741-1981, and has not specified toward the discharge of which of his said debts the amount paid was intended, the payment shall be appropriated to the various categories of debt in the order set out below, and within each category of debt the payment shall be appropriated according to the order in which the debt was incurred:
(1)tax;
(2)double tax;
(3)a fine under this Law or a fine under the Tax Law (Late Payment Fine), 5741-1981.
(b)For the purposes of subsection (a), an input tax refund and any other tax refund that has been set off against a debt under this Law or under the Tax Offsetting Law, 5740-1980, and a sum collected pursuant to the Tax Ordinance (Collection), or in any other manner, shall be treated as a sum paid.
(c)Where a sum has been paid pursuant to subsection (a), a proportionate part of the sum paid shall be appropriated against each category of liability within that debt, in the ratio that the amount of that category of liability bears to the total of that debt; for this purpose, "category of liability" means each of the following: the principal of the debt, interest, linkage differentials.

Preservation of Criminal Liability§

104.

The provisions of this Chapter shall not derogate from the criminal liability of the taxable person.

Interest on Delay in Refund§

105.
(a)Where a person is entitled to a refund of an excess amount under the first part of section 39(a), and it has not been refunded to him within 30 days as detailed below, or within a longer period prescribed as stated therein, linkage differentials and interest as referred to in section 97 shall be paid to him from the day on which he submitted the return:
(1)if the return was submitted within the time prescribed therefor, the 30 days are counted from the day on which it was submitted;
(2)if the return was submitted late, during the period from the 1st of the month to the 16th of the month, the 30 days are counted from the day on which it was submitted;
(3)in any other case, the 30 days are counted from the 1st of the month immediately following the day on which the return was submitted.
(b)
(1)Where a person is entitled to a refund of an excess amount under section 39(a)(1), (2) or (3), and it has not been refunded to him within the period prescribed therefor therein, linkage differentials and interest as referred to in section 97 shall be paid to him from the 31st day following the day on which the return was submitted;
(2)where the Director has directed, after 30 days from the day on which the return was submitted, the refund of a withheld excess amount, the linkage differentials and interest shall be paid from the 31st day as aforesaid; where the Director has so directed before the expiry of 30 days — the provisions of subsection (a) shall apply.
(c)
(1)Where any amount paid for the purposes of this Law is required to be refunded and the provisions of subsections (a) or (b) do not apply thereto, including tax as referred to in sections 87 or 88(b), linkage differentials and interest shall be added to the amount, if it was refunded after 30 days from the date of its payment, from the date of its payment;
(2)a claim for the refund of an amount as referred to in paragraph (1) may be submitted to the Director in writing, within two years from the date of payment of the amount.
(d)Linkage differentials and interest that are to be paid under subsections (a) or (b) and were not paid within 30 days from the day on which the excess amount was refunded shall be regarded as an excess amount bearing linkage differentials and interest as referred to in section 97a from the expiry of the said period.

Collection of Debt from a Third Party§

106.
(a)In this section –

"controlling shareholder" – as defined in section 119a of the Income Tax Ordinance [New Version];

"relative" – as defined in section 105k of the Income Tax Ordinance [New Version];

"final debt" – a debt under this Law that may be collected pursuant to the provisions of the Tax Ordinance (Collection);

"special relations" – relations as referred to in paragraphs (1) to (3) of the definition of "special relations" in section 129 of the Customs Ordinance [New Version], applying between parties to a transfer as referred to in this section, provided, however, that for the purposes of paragraph (2) of that definition, a minority shareholder in a company shall not be regarded as controlling another merely by reason of the fact that he has a veto right in the company whose purpose is to protect his rights as a minority in the company;

"asset" – including rights in a corporation, securities, negotiable instruments and rights therein;

"asset value" – the price that would be obtained on its sale from a willing seller to a willing buyer.

(b)Where a taxable person has a final debt and has transferred his assets without consideration, or transferred them to a person with whom he has special relations without consideration or for partial consideration, without retaining in Israel the means to discharge the debt (hereinafter – the transferor), the final debt may be collected –
(1)if the transferor is a body of persons – from the person who received the assets from that body of persons in the said circumstances;
(2)if the transferor is an individual – from the person who received the assets from that individual in the said circumstances, provided that no more than three years have elapsed from the end of the year in which the assets were transferred as aforesaid or from the end of the year in which the debt became final, whichever is the later.
(b1)Where a body of persons has a final debt and has transferred its activity to another body of persons in which, directly or indirectly, the same controlling shareholders or their relatives have an interest (in this section – the other body), without consideration or for partial consideration, without retaining in Israel the means to discharge the said debt, the debt owed by the body may be collected from the other body.
(b2)Without derogating from the provisions of subsections (b)(1) or (b1), where a body of persons has a final debt and has been wound up or has ceased its activity without paying the said debt, the assets that were held by the body shall be deemed to have been transferred to its controlling shareholders without consideration, and the debt may be collected from them, unless the contrary has been proved to the satisfaction of the Director.
(c)No more shall be collected from the person who received the assets or the activity pursuant to subsections (b), (b1) or (b2) than the value of the assets or the activity received without consideration, or the difference between the partial consideration paid and the value of the assets or the activity, and if tax was paid in connection with the transfer of the assets or the activity as aforesaid – no more than the said value or difference, less the amount of tax paid.
(d)The Tax Ordinance (Collection) shall apply to the collection of a debt from the person who received an asset as referred to in this section (hereinafter – the transferee).
(e)Where the Director has decided to act pursuant to this section, he shall give notice thereof to the transferor and to the transferee and shall afford them an opportunity to present their arguments.
(f)A decision of the Director under this section may be appealed before the District Court within 30 days from the date of delivery of the decision; where a winding-up petition or a petition for a receiving order has been filed against the transferor or the transferee, the appeal shall be heard by the court to which the petition was submitted, as the case may be.
(g)Where an asset was transferred as referred to in this section and a liability was discharged or transferred in consideration for the transfer, the court may, upon the application of the Director, declare that the discharge or transfer of the liability, as the case may be, does not constitute consideration.

Collection after the Death of a Dealer§

106a.

Where a dealer has died who, but for his death, would have been liable in respect of any reporting period, and the death occurred within three years of that reporting period, his legal representative shall be liable to pay the tax that the dealer would have owed had he not died, and shall also be responsible for doing anything that the dealer would have been responsible for doing under this Law had he not died, provided that the amount of tax for which he is liable under this section shall not exceed the value of the estate of the deceased, after deducting therefrom the debts of the deceased that have priority over the tax; for this purpose –

"legal representative" – the estate administrator, the heirs or another successor of the deceased;

"value" – as defined in section 106.

Collection of Tax in Special Circumstances§

106b.
(a)Where a body of persons has committed an act from among those listed in section 117(a)(3), (6), or (b), and an assessment, a tax determination or a demand to pay double tax has been issued against it in respect thereof, and an appeal against it has been dismissed by the District Court, the Director may determine that an office holder in the body of persons (in this section – office holder) shall also be liable to pay the tax or the double tax, as the case may be, provided that in respect of an act from among those listed in section 117(a)(3) or (6), an office holder shall not be made liable unless he has been convicted by a final judgment.
(b)Where the Director has determined that an office holder is required to pay the tax or the double tax, as the case may be, pursuant to the provisions of subsection (a), that office holder shall pay it within 30 days from the date of delivery of the notice of liability therefor.
(c)In this section, "office holder" – a person who, at the time of the commission of an act as referred to in subsection (a), was an active director, partner or controlling shareholder in that body of persons, provided that the Director holds prima facie evidence to prove that the act was committed with the knowledge of the office holder, unless that office holder has proved that he took all reasonable measures to ensure the prevention of the act; for this purpose, "controlling shareholder" – as defined in section 119a of the Income Tax Ordinance [New Version].
(d)The provisions of this section shall also apply to an assessment, determination or notice of double tax against which no objection or appeal was filed within the time prescribed in this Law.

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