withdrawals of the owners were recorded as "shareholder payments" (loans) in the financial accounts of a particular company, and even interest income was recognized with the withdrawals by the provisions of Section 3 I of the Regulation of Israel Taxes.

Section 3 (i1) (2) of the Israeli tax ordinance states that if the withdrawal funds were not returned to the company at the end of the tax year following the tax year in which they were withdrawn, the withdrawal from the company will be considered as a shareholder income and classified as a dividend.

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