In Israel, it has long been standard practice to obtain advance-tax rulings before completing a big deal – they are sometimes referred to as “pre-rulings.” The aim is to reduce uncertainty, avoid double taxation and/or avoid taxation on “paper gains” such as share-for-share transactions or employee options.The Israel Tax Authority is prepared to rule on other tax matters such as transfer pricing, tax-treaty issues, value-added tax (VAT) aspects and so forth. Certain standard rulings are the subject of “green channel” fasttrack procedures – for example to “step up” the cost of assets received from abroad by way of gift or inheritance to their market value. The ITA publishes anonymous summaries of rulings it has issued.Rulings may be partly factual, partly interpretative of the law, but always within the confines of the law. The old British custom of “extra-statutory concessions” are precluded by Section 245 of the Income Tax Ordinance.The new facility: On September 10, the ITA launched a policy for improving service bureaucracy and reducing bureaucracy for professional advisors – they can now apply online for tax rulings on behalf of their clients, attach relevant documents and follow up how they are dealt with. The service is only available to accountants, lawyers and tax advisors authorized to represent their clients. The service is not available to taxpayers themselves at this stage.The ITA announcement reminds us that an advance-tax ruling is a decision relates to a tax liability, tax results or tax consequences regarding a transaction carried out or regarding income, profit, expense or a loss. Rulings are supposed to be issued by the tax ruling institute in cases when it is not clear what is the tax liability or result of a transaction, before or sometimes after the transaction is carried out.How it works: The online service asks whether the ruling request is being made before the transaction; after the transaction; after the transaction but before reporting it; or during an ongoing transaction. The ruling may relate to international tax, real-estate, VAT, mergers and divisions, capital markets, charities, agriculture, builders, options, provident funds and personal tax or another. But applications must be concise, 200 characters in fact....What is not mentioned on the website? Transfer pricing is not mentioned – that is, determining market pricing and terms for international transactions between related parties, usually within a multinational group. This is surprising considering the huge tax revenues that may be at stake.Will a ruling stick? Probably, because there are clear rules about advance-tax rulings in the Income Tax Ordinance.According to the ITO, taxpayers may apply to the director of the ITA for a ruling regarding the liability to tax, the tax result or any consequence thereof with regard to an act performed or income, profit, expenditure or loss that the taxpayer incurred.The application must be submitted before the due date for filing the annual-income tax return concerned (or before the execution of a transaction in real estate and VAT cases).The application must contain relevant material details, documents, confirmations, opinions obtained, declarations, valuations, agreements or draft agreements if no final agreements have been signed. There are generally no time limits for issuing a ruling. Ruling conditions or ruling time limits may be stipulated. The tax director may issue or refuse to issue a ruling or refer the matter to an assessing officer for a reply.The applicant must be given a reasonable opportunity to be heard. The ruling cannot be appealed, but the existing objection process can be applied to any ensuing assessment.Note that an application may not be withdrawn without the tax director’s permission.The application may be anonymous, but the ruling will only be issued after the applicant is identified.Any ruling binds the tax director unless the information or documents submitted were incomplete false or “if the circumstances relating to the ruling have changed.”If the ruling was issued by agreement, the applicant is bound by the ruling, unless the act concerned was not carried out.The tax director may charge a fee but usually does not at present, except in certain mergers and acquisitions cases.What about transfer pricing? Separate rules are prescribed in the ITO for advance-pricing agreements. An APA application must be accompanied by all material facts and details of the transaction( s), the method for determining the price, as well as any relevant documents, confirmations, opinions, declarations, valuations, transaction agreement or draft agreement, and any other documents or details requested by the director.The director must issue his APA ruling and grounds within 120 days after receiving all the above documents, but within this period he may notify an extension of the period, for reasons that will be recorded, up to 180 days. If the director does not respond within this period, the taxpayer’s application is deemed to be confirmed.What happens if another taxpayer gets a better ruling than you do? A Haifa District Court case (Income Tax Appeal 589/04 – Ariela & Moshe Shahar v.Hadera Assessing Officer) requires the ITA to avoid inequality. The case dealt with stock options of a well known company. The Judge ruled that an executive body such as the ITA cannot reach an arrangement that discriminates between different taxpayers in similar circumstances and prevent the arrangement being applied to the one of them. Furthermore, such arrangements should not be signed and concealed.Will the new online ruling service work? The jury is out on whether the new online ruling facility will work. In recent years, there have been several tax ruling scandals in which over-generous rulings were issued.In one case, the director of the ITA was caught red-handed and was jailed for a year.Consequently, many tax officials are extremely cautious and slow to issue tax rulings and the ruling process is far less popular than it used to be. Moreover, ruling applicants must decide whether to apply to the upper echelons of the ITA or go to the local tax office – the latter are sometimes keener to strike a deal and collect the ensuing tax, but it may be more than the applicant first thought.It seems the new online facility is intended to increase lagging demand for tax rulings, but it is unclear whether going online will make much difference....As always, consult experienced tax advisors in each country at an early stage in specific cases.[email protected] The writer is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.