PART SEVEN: TAX RATES

Tax rates for individuals
121. (a) The tax on the chargeable income of an individual in the tax year shall
be as follows:
(1) on each new shekel of the first NS 192,000 – 30%;
(2) on each new shekel from NS 192,001 to NS 413,400 – 32%;
(3) on each additional new shekel – 44%.
(b) (1) Notwithstanding the provisions of subsection (a)(1) and subject to
the provisions of paragraph (2), the following rates shall apply in
the tax year to chargeable income from personal exertion or to
the chargeable income of an individual who has reached age 60:
(a) on each new shekel of the first NS 50,040 – 10%;
(b) on each new shekel from NS 50,041 to NS 89,040 – 14%;
(c) on each new shekel from NS 89,041 to NS 133,680 – 21%;
(d) on each new shekel from NS 133,681 to NS 192,000 –
28%.
(2) The reduced rates prescribed in paragraph (1) shall not apply to
income, in respect of which account books must be kept, if in its
respect acceptable books were not kept.
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NOTE: The tax brackets stated in section 121 above will apply in tax year 2010 and 184
thereafter. Until then different tax brackets are in effect, as provided by Section 76 of
Amendment No. 147, which was again amended in Amendment No. 160
Below we state the amounts, as they originally appeared in Amendment No. 147 and
as changed in Amendment No. 160. In respect of tax years 2006 and 2007, those
amounts are also shown in parentheses, after they were adjusted for changes in the
index, as shown in Karan A. In respect of tax years 2008 and 2009 those index
driven changes are, of course, not yet known. – Tr.

Income Tax Ordinance – Ad Hoc Provisions for tax years 2006 to 2009
in respect of section 121
76. (a) In respect of tax year 2006, section 121 of the Ordinance shall be read
as follows:

"Tax rates for individuals for tax year 2006
121. (a) In tax year 2006, the tax on the chargeable income of an individual
shall be as follows:
(1) on each new shekel of the first NS 133,680 (NS 137,280) – 30%;

(2) on each new shekel from NS 133,681 (NS 137,281) to NS
238,680 (NS 245,040) – 36%;
(3) on each new shekel from NS 238,681 (NS 245,041) to NS
413,400 (NS 424,440) – 37%;
(4) on each additional new shekel – 49%.
(b) (1) Notwithstanding the provisions of subsection (a)(1) and subject to
the provisions of paragraph (2), the following rates shall apply in
the tax year to chargeable income from personal exertion or in
respect of the chargeable income of an individual who has
reached age 60:
(a) on each new shekel of the first NS 50,040 (NS 51,360) –
10%;
(b) on each new shekel from NS 50,041 (NS 51,362) to NS
89,040 (NS 91,440) – 22%;
(c) on each new shekel from NS 89,041 (NS 91,441) to NS
133,680 (NS 137,280) – 29%.
(2) The reduced rates prescribed in paragraph (1) shall not apply to
income, in respect of which account books must be kept and in
its respect acceptable books were not kept. "

(b) In respect of tax year 2007, section 121 of the Ordinance shall be read
as follows:

"Tax rates for individuals
121. (a) In tax year 2007 the tax on the chargeable income of an individual shall
be as follows:
(1) on each new shekel of the first NS 133,680 (NS 136,920) –
30%;
(2) on each new shekel from NS 133,681 (NS 136,921) to NS
192,000 (NS 196,560) – 35%;
(3) on each new shekel from NS 192,001 (NS 196,561) to NS
413,400 (NS 423,240) – 36%;
(4) on each additional new shekel – 48%.
(b) (1) Notwithstanding the provisions of subsection (a)(1), the following
rates shall apply in the tax year to chargeable income from
personal exertion or in respect of the chargeable income of an 185
individual who has reached age 60:
(a) on each new shekel of the first NS 50,040 (NS 51,240) –
10%;
(b) on each new shekel from NS 50,041 (NS 51,241) to NS
89,040 (NS 91,200) – 21%;
(c) on each new shekel from NS 89,041 (NS 91,201) to NS
133,680 (NS 136,920)– 29%;
(2) The reduced rates prescribed in paragraph (1) shall not apply to
income, in respect of which account books must be kept and in
its respect acceptable books were not kept. "

(c) In respect of tax year 2008, section 121 shall be read as . . . follows:

"Tax rates for individuals
121. (a) In tax year 2008 the tax on the chargeable income of an individual shall
be as follows:
(1) on each new shekel of the first NS 140,640 – 30%;

(2) on each new shekel from NS 140'641 to NS 202,080 –
33%;
(3) on each new shekel from NS 202,081 to NS 435,120 –
35%;
(4) on each additional new shekel – 47%.
(b) (1) Notwithstanding the provisions of subsection (a)(1), the following
rates shall apply in the tax year to chargeable income from
personal exertion or in respect of the chargeable income of an
individual who has reached age 60:
(a) on each new shekel of the first NS 52,680 – 10%;
(b) on each new shekel from NS 52,681 to NS 93,720 – 16%;
(c) on each new shekel from NS 93,721 to NS 140,640 – 26%;
(2) The reduced rates prescribed in paragraph (1) shall not apply to
income, in respect of which account books must be kept and in
its respect acceptable books were not kept. "

(d) In respect of tax year 2009, section 121 shall be read . . . .as follows:
"Tax rates for individuals
121. (a) In tax year 2009 the tax on the chargeable income of an individual shall
be as follows:
(1) on each new shekel of the first NS 133,680 – 30%;
(2) on each new shekel from NS 133,681 to NS 192,000 –
32%;
(3) on each new shekel from NS 192,001 to NS 413,400 –
34%;
(4) on each additional new shekel – 46%.
(b) (1) Notwithstanding the provisions of subsection (a)(1), the following
rates shall apply in the tax year to chargeable income from
personal exertion or in respect of the chargeable income of an
individual who has reached age 60:
(a) on each new shekel of the first NS 50,040 – 10%;
(b) on each new shekel from NS 50,041 to NS 89,040 – 15%;
(c) on each new shekel from NS 89,041 to NS 133,680 – 23%;
(d) on each new shekel from NS 133,681 to NS 192,000 –
30%.
(2) The reduced rates prescribed in paragraph (1) shall not apply to 186
income, in respect of which account books must be kept and in
its respect acceptable books were not kept.
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121A. Repealed

Rental of dwelling unit
122. (a) If, during the tax year, an individual had income from the rental of a unit
used for residential purposes in Israel (hereafter in this section: rental
income), he may pay on it tax at the rate of 10% thereof, instead of the
tax on it to which he is liable under section 121, if the rental income is
not income from business as said in section 2(1).
(a1) Tax said in subsection (a) shall be paid within 30days after the end of
the tax year in which the individual had rental income, unless the
individual paid advances under section 175 in that tax year.
(b) repealed
(c) Notwithstanding the provisions of any statute, an individual who elected
to pay tax as said in subsection (a) shall not be entitled to deduct
depreciation or any other deduction in respect of the dwelling, or
expenses incurred in the creation of the rental income, and he shall not
be entitled to any set off, credit or exemption on rental income or from
the tax on it; however, for the purpose of calculating Land Appreciation
Tax on the sale of the dwelling the maximum amount of depreciation or
deduction which could have been deducted under any statute for the
period in which the individual paid tax as said in subsection (a), if not
for this section, shall be added to the sale price.
(d) Repealed
(e) Repealed

Rental income from abroad
122A. (a) If an individual had rental income in the tax year from the rental of real
estate abroad, then he may pay on it tax at the rate of 15%, instead of
the tax to which he is liable under section 121, if the income is not
income from business as said in section 2(1).
(b) If an individual elected to pay tax as said in subsection (a), then he is
not entitled to subtract from the rental income expenses incurred in
producing the income, except for depreciation, and he also is not
entitled to any set off, credit or exemption from the rental income or
from the tax due on it, including a credit said in Part Ten, Chapter
Three.
(c) For the purposes of this section, "real estate" includes a part thereof.

123. Repealed

Rate of tax on key money and premiums
124. Notwithstanding the provisions of sections 121, 126 and 127, the tax on
income from key money or premiums derived from house property shall not
exceed 35%, if the assessee paid tax on that income at the said rate to the
Assessing Officer within 30 days after its receipt, or – if the assessee reports
his income on an accrual basis – within the period prescribed in section 132
for filing the return or within 30 days after its receipt, whichever is earlier.

Tax rate on the sale of rights to which the Tenant Protection Law applies
124A. (a) in this section – 187
"determining day" – November 7, 2001;
"determining period" – the period from the determining day to the end
of tax year 2003.
(b) Notwithstanding the provisions of section 121, if on the determining day
a tenant holds an asset to which the Tenant Protection Law applies,
and if during the determining period he sells all his rights in the asset to
the holder of rights in that asset, then he shall be liable to tax on the
real capital gain at rates that shall not exceed the following:
(1) if the sale took place between the determining date and the end
of tax year 2002 – 15%;
(2) if the sale took place in tax year 2003 – 20%;
on condition that – after the sale – the Tenant Protection Law ceased to
apply to that asset.

Tax rate on income from gambling, lotteries or prizes
124B. Notwithstanding the provisions of section 121, the tax rate on income from
gambling, lotteries or prize winning activity under section 2A shall be 25%,
with no entitlement to any exemption, reduction, deduction, credit or set off
whatsoever, except for an exemption under section 9(28) or a deduction
under section 17(11).

Tax rate on sale of patent, etc.
125. Notwithstanding the provisions of section 121, the taxes on income received
by an inventor from the sale of a patent or design, or by an author from the
sale of a copyright, the invention or work not being within the scope of his
regular occupation, shall not exceed 40%.

Tax on income after death
125A. Notwithstanding the provisions of section 121, the tax rate on a person's
income to which section 3(f) applies, or on a person's work income received
after his death, shall not exceed 40%; for this purpose: "work income" –
including part of a grant received in consequence of death, which is not
exempt under section 9(7a).

Tax rate on dividends
125B. Notwithstanding the provisions of section 121 and 126, the tax rate on income
from dividends shall be as follows:
(1) dividends received by an individual – 20%;
(2) notwithstanding the provisions of paragraph (1), dividends received by
an individual who – at the time he received the dividend or at any time
during the preceding twelve months – was a substantive shareholder,
as defined in section 88, in the body of person that paid the dividend –
25%;
(3) dividends received by a family company – 20%; however, if the
assessee, within its meaning in section 64A, is directly or indirectly a
substantive shareholder in the body of persons that paid the dividend –
25%;
(4) dividends that are not tax exempt and were received by a public
institution or a benefit fund, as defined section 9(2) – 20%;
(5) dividends received by a foreign resident body of persons – 20%; but if–
at the time it received the dividend or at any time during the preceding
twelve months – the body of persons was a substantive shareholder, as
defined in section 88 – 25%.
188
Tax rate and tax exemption on an individual's profits from a trust fund
125B1. (a) Profits distributed by the manager of a chargeable trust fund to an
individual unit holder, for whom the income does not constitute income
from business or vocation, are exempt of tax.
(b) Profits distributed by the manager of an exempt trust fund to an
individual unit holder, for whom the income does not constitute income
from business or vocation, are liable to tax at the rate of 20%.
(c) Every term in this section shall have the meaning it has in Part Five.

Tax rate on income from interest and discount
125C. (a) In this section –
"substantive shareholder" – as defined in section 88;
"index" – the Consumer Price Index, as last published on behalf of the
Central Bureau of Statistics before the day in case, and in respect of an
asset, the value of which is linked to a foreign currency or that is
denominated in a foreign currency – the currency exchange rate;
"interest" includes discount.
(b) An individual is chargeable to tax on income from interest at a rate that
shall not exceed 20%, and this income shall be deemed the highest
bracket of his chargeable income.
(c) (1) Notwithstanding the provisions of subsection (b), if the interest
was paid on an asset that is not index linked, or if it is partly
linked to the increase of all or part of the index, or is not index
linked up to the redemption or repayment, then the individual's
income from interest shall be charged tax at the rate of 15%.
(2) The Minister of Finance may, by Order, change the interest rate
stated in paragraph (1) in accordance with changes in the index.
(d) Notwithstanding the provisions of subsections (b) and (c), an individual
is liable to tax on income from interest at the rates prescribed in section
121, if one of the following holds true for him:
(1) the interest is income under section 2(1) or is entered in his
account books or should be entered as aforesaid;
(2) the individual claimed interest and linkage differential expenses in
respect of the asset, on which the interest is paid;
(3) the individual is a substantive shareholder in the body of persons
that paid the interest;
(4) the individual is employed by the body of persons that paid the
interest, or provides services to it or sells products to it, or he has
some other special relationship with it, unless it was proved to the
Assessing Officer's satisfaction that the interest rate was set in
good faith and without being affected by the said special
relationship between the individual and the body of persons;
(5) the interest was paid by a training fund before the periods said in
section 9(16a) or (16b) passed, or it was paid by a savings
benefit fund and the provisions of section 3(d) applied to it;
(6) some other condition prevails, which the Minister of Finance
prescribed with approval by the Knesset Finance Committee.
(e) The provisions of this section shall not apply to money paid by a benefit
fund that is not a savings benefit fund or is not a training fund, and they
shall also not apply to money paid by a savings benefit fund that is
charged tax under the provisions of section 87. 189

Deduction from interest
125D. (a) In this section –
"determining date" – January 1, 2003;
"benefit ceiling" – the amount of NS 53,280 per year (in 2008; in 2007:
NS 51,840; in 2006: NS 52,08; in 2005: 50,640 – Tr.);
"interest" – interest payable on a deposit with a banking corporation or
on a savings program;
(b) If the income of an individual and the income of his spouse in a tax year
did not exceed the benefit ceiling, then he is entitled to a deduction of
NS 8,280 (in 2008; in 2006 and 2007: NS 8,160; in 2005: NS 7,920 –
Tr.); (in this section: the permitted deduction) from his chargeable
interest income, but not more than his total interest income; however, if
his and his spouse's income in the tax year exceeded the benefit
ceiling, then he shall be entitled to an adjusted deduction; for this
purpose: "adjusted deduction" – the permitted deduction, after it was
reduced by the amount by which the income of the individual and of his
spouse exceeded the benefit ceiling.
(c) (1) If in a tax year an individual or his spouse had reached the
mandatory retirement age, within its meaning in the Retirement
Age Law 5764-2004 (in this subsection: mandatory retirement
age) and if one of them had reached age 55 by the determining
date, then he is entitled to a deduction of NS 8,160 (in 2008; in
2006 and 2007: NS 8,040; in 2005: NS 7,800 – Tr.) from his
interest income, but not more than his total interest income;
(2) if in a tax year an individual and his spouse had reached the
mandatory retirement age and if they had reached age 55 by the
determining date, then – instead of the deduction said in
paragraph (1) – he is entitled to a deduction of NS 12,360 (in
2008; in 2006 and 2007: NS 12,000; in 2005: NS 11,700 – Tr.)
from his interest income, but not more than his total interest
income;

Benefited interest
125E. (a) In this section –
"entitling interest" – the lesser of the following amounts:
(1) the interest income of an individual and his spouse, as defined in
section 125D(a) (in this section: interest);
(2) interest income in the amount of the differential between the
amount stated in the definition of "entitling pension" in section 9A
multiplied by twelve, and the chargeable income of the individual
or of his spouse, whichever is greater; for this purpose:
"chargeable income" – including income exempt under sections
9A and 9B, and exclusive of income from interest, income from
the tax exempt rental of a dwelling unit, capital gains and land
appreciation, as defined in the Real Estate Taxation Law.
(b) 35% of the entitling interest is tax exempt for the following:
(1) an individual who has reached the retirement age;
(2) an individual, if he or his spouse has reached the retirement age;
and all if they have reached age 55 by the determining date.

Restriction
125F. Deductions under section 125D and tax exemptions under section 125E shall
be allowed for only one of the spouses. 190

Companies tax
126. (a) The chargeable income of a body of persons shall be charged with a
tax called "companies tax", at the rate of 25%.
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Note: Section 77(a) of Amendment 147 provides as follows:
77. (a) In respect of tax years 2006 to 2009 section 126(a) of the Ordinance . .
. . shall be read as if, instead of "25%", the following rates were
prescribed:
(1) for tax year 2006 – 31%;
(2) for tax year 2007 – 29%;
(3) for tax year 2008 – 27%;
(4) for tax year 2009 – 26%.
(b) The Minister of Finance may, with approval by the Government and the
Knesset Finance Committee, prescribe that in a tax year said in
subsection (a) the tax rate prescribed in section 126(a) apply to one of
the following years, on conditions and with adjustments that he shall
prescribe. – Tr.
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(b) In calculating the chargeable income under subsection (a), income from
a distribution of profits or from dividends that stem from income
produced or accrued in Israel, received directly or indirectly from
another body of persons that is liable to companies tax, shall not be
included, and income for which a special tax rate has been set also
shall not be included.
(c) Notwithstanding the provisions of subsection (a), companies tax at the
rate of 25% shall be imposed on the chargeable income of a body of
persons from dividends that stem from income produced or accrued
abroad and also from dividends that originated abroad; however, if at
the assessee company's request or on the basis of an agreement for
the prevention of double taxation the foreign taxes imposed on those
dividends and on the income out of which the dividends were
distributed are to be taken into account, then the income from the
dividend shall be taken in the amount of the grossed up dividend and
on it companies tax shall be imposed at the rate prescribed in
subsection (a); in this section –
"grossed up dividend" – the amount of dividend income, with the
addition of tax paid on the income, out of which the dividend was
distributed;
"assessee company" – a company that received dividends from
another company in which it holds 25% or more of the means of control
(hereafter in this section: the other company);
"income out of which the dividend was distributed" – including
income that stems from a company that is at least 50% held directly by
the other company;
"means of control" – as defined in section 88.
(d) In calculating the tax that applies under subsection (c), credit shall be
given in the amount of companies tax which the body of persons that
distributes the dividend was charged on the income out of which the
profits or the dividends said in subsection (a) were paid, and the total
tax rate that applies under subsection (c) shall not exceed the rate
determined in subsection (a).
(e) The amount of credit said in subsection (d) and in Part Ten, Chapter
Three shall not be greater than the tax that applies under subsection (c) 191
and the provisions of section 205A shall not apply.
(f) If a body of persons received a dividend and a loss was set off against
the income from it, and if the body of persons thereafter distributed the
dividend to its share holders, then – for the purposes of subsection (c)
– it shall be deemed that companies tax at the rate of 25% was paid in
respect of the dividend.

Tax alleviation on dividend income that stems from abroad
126A. (a) In this section –
"controlling member" – as defined in section 3(i);
"dividend income" – of a company – the company's liable income from
dividends the origin of which is abroad, which a foreign resident body of
persons paid to it and which it received in Israel in tax year 2009, other
than said income from dividends derived from income that – had it not
been distributed to the company or to another body of persons in the
same chain of companies, as defined in section 75B(a)(14), would be
profits that were not paid as defined in section 75B(a)(12), and on
condition that – if the company is a controlling member of the body of
persons that pays the dividend – the following amounts be subtracted
from the income:
(1) the amount of loans extended by the company to the body of
persons that pays the dividend or to its relative during the period
from December 1, 2008, until December 31, 2010 (in this
definition: the determining period) and that had not been repaid in
the determining period;
(2) the amount of guaranty provided by the company for the body
of persons that pays the dividend or for its relative in respect of a
loan taken by the body of persons during the determining period,
on condition that the guaranty was exercised during the
determining period;
(3) the amount paid by the company during the determining
period for the acquisition of securities of the body of persons that
pays the dividend or of its relative;
"relative" – as defined in paragraph (3) of the definition of "relative" in
section 88;
"use in Israel" – a use that is one of the following, other than a direct or
indirect payment to an individual who is a controlling member of the
company that receives the dividend:
(1) payment to Israel residents for services provided in Israel or
for work performed in Israel;
(2) payment for the acquisition or rental of assets that will be
used in Israel, and also payments to Israel residents for the
acquisition or rental of assets; for this purpose, "asset" – other
than securities, as defined in section 88;
(3) payment for the improvement or maintenance of assets in
Israel;
(4) investment in research and development in Israel;
(5) repayment of debts to Israel residents, and if the repayment is
to a relative body of persons – on condition that that body of
persons use the repaid money in Israel;
(6) payment of interest, discount or linkage differentials on 192
debentures traded on an Exchange in Israel, and also acquisition
by the company that receives the dividend of said debentures
that had been issued by it;
(7) making a deposit in Israel, with an Israel resident body of
persons, for a period of at least one year (in this definition: the
"deposit period") or acquisition of securities traded on an
Exchange in Israel and holding them at least for a year (in this
definition: the "holding period"); for this purpose –
(a) a security shall be treated as if it had been held during the
entire holding period even if it was sold before the end of
the said period, if another security traded on an Exchange
in Israel was acquired with the full consideration for its sale
and was held for the remainder of the holding period;
(b) if a certain amount was deposited as aforesaid in this
paragraph for a period shorter than the deposit period and
if securities in the same amount were acquired and held as
aforesaid in this paragraph for a period shorter than the
holding period, then it shall be deemed that the said
amount was used in Israel in accordance with this
paragraph, if the aggregate of the periods of the deposit
and of holding is at least one year;
(8) payment of a dividend to an Israel resident company, on
condition that that company make use of it in Israel.
(b) Notwithstanding the provisions under this Ordinance, at the
company's request companies tax at the rate of 5% shall be imposed
on a company's dividend income that was used in Israel during the year
2009 or within one year after the actual receipt of the dividend, on
condition that the company that received the dividend is not a
subsidiary, within its meaning in section 64, a family company within its
meaning in section 64A or a transparent company, as defined in
section 64A1.
(c) The provisions of section 126 shall apply to the part of the dividend
received by the company as said in subsection (b) and used in Israel.
(d) Notwithstanding the provisions under this Ordinance, if the company
requested that companies tax on its dividend income be imposed on it
under this section, then a credit shall be granted against the said tax for
the deduction of tax from the said income at the source, and no credit
shall be given for foreign taxes that are not imposed directly, as defined
in section 203(c).
(e) The provisions of section 205A shall not apply to foreign taxes, as
defined in section 199, that were paid on the dividend income that was
charged companies tax under this section.
(f) If a company, which requested that companies tax be imposed on it
under this section, proved that it made use of any amount whatsoever
in Israel during any of the periods said in subsection (b), then it is
assumed that the use of that amount in Israel was out of the dividend
income, even if the company received that income after it had made the
said use.
(g) For the purposes of subparagraph (b) in the definition of a "controlled
foreign company" in section 74B(a)(1), income received by a foreign
resident body of persons in tax year 2009 and distributed to an Israel 193
resident company as dividend in that same tax year shall not be taken
into account, if the dividend income was charged companies tax under
this section. "
127. and 128. – Repealed

Exemption of certain cooperative societies from companies tax
129. (a) If a cooperative society does business only with its members or if its
business with nonmembers is inconsiderable or of an incidental nature,
and if most of its said business is the marketing or processing of its
members' agricultural produce, then it shall be liable to tax at the rate of
20% on that part of its chargeable income which is derived from one of
the following:
(1) the marketing or processing of its members' agricultural produce;
(2) the supply of agricultural inputs and equipment to its members;
(3) its income from agriculture, on condition that more than 90% of
its members' income from agriculture is derived from the
marketing of farm products through it;
the amount, to which the said reduced tax rate applies, shall not exceed
3% of its turnover in that year, but the Minister of Finance may, with
approval by the Knesset Finance Committee, increase the said rate by
Order.
(b) If a cooperative society distributed or repaid to its members, directly or
indirectly, profits on which it paid reduced tax under the provisions of
subsection (a), then it shall be liable to pay the amount of tax at the
aforesaid reduced rate within 30 days after the day of the distribution or
repayment.
(c) In this section –
(1) "cooperative society" – a cooperative society whose members
are cooperative societies or individuals and the greater part of the
income of each of 51% of its members is from agriculture, on
condition that its members number no fewer than –
(a) 40 members, if only individuals are members;
(b) five cooperative societies with a total said membership of at
least 200, if all members are cooperative societies.
(c) 30 members and five cooperative societies, if the members
are both individuals and cooperative societies;
(2) "member" includes a candidate for membership, for whom a year
of candidacy has not ended.

129A. Repealed

Income derived by a benefit fund from real estate and foreign securities
129B. (a) Notwithstanding the provisions of section 126, the chargeable income
of a benefit fund from a business of renting buildings built by itself or
through others, construction of which began in or after tax year 1991,
shall be liable to tax at the rate of 20%.
(b), (b1), (c) and (d) Repealed

Income of a trust fund
129C. (a) Notwithstanding the provisions of section 126 –
(1) the income and profits of an exempt trust fund are exempt of tax;
(2) those tax rates shall apply to the chargeable income of a
chargeable trust fund, which would have applied to the said 194
profits or income, if they had been received by an individual, for
whom the income is not income from business or occupation,
unless there is a different specific provision; if no special tax rate
was determined for the income, then the income shall be charged
tax at the maximum rate prescribed in section 121.
(3) repealed
(4) the deduction of interest and linkage differential expenses shall
not be allowed in the calculation of a trust fund's income and
profits;
(5) in respect of the determination of the chargeable income of
chargeable trust funds, the Minister of Finance may, with
approval by the Knesset Finance Committee, prescribe each of
the following:
(a) repealed
(b) in this section, "trust fund", "exempt trust fund" and
"chargeable trust fund" – as defined in section 88;
(c) special provisions on tax exemptions or special tax rates
for certain types of income of chargeable trust funds that
are intended for unit holders who are foreign residents,
according to the tax rate that would apply to that income, if
it were received by a foreign citizen;
(d) the method for calculating linkage or the inflationary
amount according to the fund's investments or assets.
(b) In this section, "business unit", "trust fund", "exempt trust fund",
"chargeable trust fund" and "mixed trust fund" – as defined in
section 88.

Special provisions on setting off losses in a chargeable trust fund
129D. A capital loss from foreign securities, which a chargeable trust fund suffered
until December 31, 2002 (in this section: the accrued loss) shall be brought
forward to the coming years, one after the other, in order to set it off against
capital gains from the sale of foreign securities, on condition that a loss
greater than 40% of the accrued loss shall not be allowed to be set off in
each of the tax years 2003 and 2004; however, if less than 40% of the
accrued loss was set off in tax year 2003, then the differential of the accrued
loss shall also be allowed to be set off in tax year 2004; for this purpose:
"differential of the accrued loss" – an amount equal to 40% of the accrued
loss, less the amount of accrued loss set off in tax year 2003.

Powers of the Minister of Finance on the taxation of savings programs
129E. (a) The Minister of Finance may, with approval by the Knesset Finance
Committee, set the rate of tax to be paid by banking corporations and
insurance companies on certain income from money deposited in
savings programs and which under the terms of the program is referred
to the saver, provided that the tax rate so set not be greater than the
differential between the tax rate that would have applied to that income,
had it been received by an individual for whom the income is not
income from business or occupation, and 15%; he may also set a limit
for the deduction of expenses, allocations and set-offs of losses against
that income, all on conditions that he shall prescribe.
(b) The tax said in this section shall be deducted from the income which
under the conditions of the program is referred to the saver, and the 195
banking corporation or the insurance company, as the case may be,
shall not be entitled to any deduction, credit or set off in respect of that
tax.
(c) Notwithstanding the provision of any statute, a person who saves in a
savings program said in this section is not entitled to any tax refund or
credit in respect of the tax paid by the banking corporation or insurance
company, as the case may be.