Israeli VAT rates and compliance
Israeli VAT rates
There are two Israeli VAT rates - standard and nil rates.
The current rates are:
Israeli VAT rates
|Rate||Type||Which goods or services|
|17%||Standard||(since 1 October 2015)|
|7.5%||Reduced||Payroll tax on wages in lieu of VAT for non-profit organisations.|
|17%||-||Payroll tax on wages in lieu of VAT for financial institutions.|
|0%||Zero||Zero VAT rate applies to exports; some tourism services; sale of fruit and vegetables.|
||Financial services, certain real estate sales and leasings, diamonds and precious metals, not-for-profit organisations|
Although VAT exempted, financial service companies and not-for-profit organisations are liable to a wage and profits tax.
Israeli VAT compliance
As a tax payer, a VAT registered business must comply with the rules and record keeping requirements of the VAT Act. This includes compliance of invoice format and records. VAT invoices and records must be stored for at least seven years. Records may be stored electronically, and must be updated quarterly.
Time of supply
The time the VAT is due – time of supply or tax point – is generally the time of delivery or cash payment of the goods. For services, it is the time of cash settlement. For installment payments, the VAT is due at the corresponding time of each payment. VAT on advance payments is only liable once the delivery is performed.
Import VAT is due at the time of clearing the goods into Israel through customs.
For the non-declaration or payment of VAT, there are a number of potential penalties:
- NIS 217 fine for every two days a filing is late
- Interest on late payments
- Potential criminal charges for more serious offences, including non-disclosure
Latest Israeli news
December 10, 2017
Israel is considering becoming the latest country to exempt sales of bitcoin and other cryptocurrencies from VAT. Instead, profits from dealing in the digital currencies...
September 4, 2017
Israel has lowered for the annual sales threshold for the entitlement to submit bi-monthly VAT returns to ILS 1.49million from ILS 1.5million. This new...
January 17, 2017
The Israeli tax office has confirmed that trading in bitcoin is subject to 17% VAT. The announcement confirms that virtual currencies, such as bitcoin,...