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Israel backtracks on VAT rate cut

  • Apr 20, 2015 | Richard Asquith

Israel backtracks on VAT rate cut

A commitment by the new Netanyahu government to reduce the Israeli VAT rate on basic foodstuffs may not be withdrawn.

The promise made in the recent election to reclassify food from the standard rate of 18% to the reduced rate of ‘nil’ now looks uncertain. The measure was to target milk, bread and eggs. The measure was a concession to the ultra-orthodox parties which the ruling party wanted to attract.

Many economists have attacked the policy as fiscally negative. They also state that is would provide indiscriminate tax relief as VAT is paid by all consumers irrespective of their wealth and incomes.

Alternatives are now being proposed, including welfare benefit increases and negative income taxes.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.