From biotech to energy: More listed partnerships clarify status with U.S. tax authority

Following a TASE requirement, energy partnership Ratio joins BioMeat and Mediforce in clarifying that a U.S. tax regulation mandating a 10% withholding tax does not apply to it. The market-wide move aims to remove barriers for foreign investors and increase certainty.

Energy partnership Ratio Energies joined tech partnerships BioMeat Foodtech and Mediforce Health in filing a report declaring that IRS Treasury Regulation Section 1446(f) does not apply to it. The reason, similar to its predecessors, is the lack of business activity in the U.S. The reports were filed following a proactive request by the Tel Aviv Stock Exchange to provide certainty to investors and avoid a 10% withholding tax upon the sale of participation units.

Public partnerships' clarifications regarding U.S. tax regulations are expanding beyond the tech sector. After BioMeat Foodtech and Mediforce Health published reports on the matter, energy partnership Ratio Energies joined them today (Thursday). In a filing it issued (2026-01-088115), Ratio also clarifies, following TASE requirements, that Section 1446(f) of the U.S. Internal Revenue Code does not apply to it. The move, now becoming market-wide, removes a potential barrier for foreign investors and signals a coordinated effort by the stock exchange to enhance market transparency and certainty.

Background: Section 1446(f) and risk to investors

At the heart of the matter is Section 1446(f) of the U.S. Department of the Treasury and Internal Revenue Service (IRS). This regulation, which took effect in recent years, imposes a 10% withholding tax on gross proceeds from the sale of interests in publicly traded partnerships (PTPs) engaged in a U.S. trade or business. The obligation falls on the broker executing the transaction and applies to all investors, U.S. and foreign alike. For the Israeli capital market, where several public partnerships operate across various sectors, the regulation created ambiguity and concern over trading friction, as brokers might exercise extreme caution and withhold tax even when unnecessary.

The declarations: "No U.S. trade or business"

To address the issue, TASE approached public partnerships requesting formal clarification of their status. In response, the three partnerships issued substantially identical filings. Ratio Energies' report, similar to those of BioMeat Foodtech (2026-01-087882) and Mediforce Health (2026-01-087747), explicitly states that "following TASE's inquiry... the partnership hereby submits a declaration... that the regulation does not apply to the partnership."

The reason, as detailed in all three filings, is simple and unequivocal: "The partnership has no trade or business in the U.S." This declaration provides a "Safe Harbor" for brokers and investors, confirming there is no legal basis for withholding tax under the U.S. regulation. All partnerships committed to updating the market on any future change in their status that could impact the applicability of the regulation.

Significance: Preserving market efficiency

The inclusion of Ratio Energies, a leading oil and gas exploration partnership, underscores that this is not a niche tech sector issue, but a broad initiative affecting the structural framework of public partnerships traded in Tel Aviv. Though technical, the move highlights TASE's efforts to align with international regulatory standards and remove potential barriers for global investors. By requiring proactive disclosure from partnerships, the exchange works to prevent regulatory uncertainty from harming the liquidity and attractiveness of its listed securities. For investors, the filings offer formal confirmation that their investments are not subject to U.S. withholding tax obligations, as long as the partnerships' operating models remain unchanged.