A draft Order in Council relating to the protocol to the UK/Israel double tax treaty, signed on 17 January 2019, has been laid before the House of Commons for approval by resolution.
The protocol enters into force once both countries have completed their parliamentary procedures and exchanged diplomatic notes. The UK's parliamentary procedures will be completed once this Order in Council has been approved. The new protocol provides UK companies with reduced rates of Israeli tax on dividends, interest and no Israeli tax on royalties, while UK Pension Schemes will suffer no Israeli tax on payments of dividends and interest. It also implements standards agreed as part of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project, including modern anti-avoidance provisions that ensure only those companies engaged in genuine business activity can benefit from the treaty and changes to the definition of a permanent establishment, and allows for the exchange of information between the UK and Israel.
For further details on the significance of this Order and the protocol itself, see here.
