52 VAT outputs related to income from carried interest will not be deductible. Regarding management fees, the proposal aims to provide certainty by stipulating that management fees attributed to the investment of foreign limited partners in funds meeting the criteria to be determined in the regulations, will be subject to a 0% VAT rate. This will be based on the portion of foreign investors in the fund (like the current arrangement regulated in specific tax rulings of the Israeli VAT Authority). As indicated above, if and when the proposed legislation is adopted, it will significantly contribute to encouraging foreign resident investments in the Israeli economy, particularly through investment funds. Daniel Paserman, Head of Tax Dr. Eyal Raz, Partner Gila Ponte-Shlush, Partner Dvir Hollander, Associate
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