Israel VAT increase goes ahead 2 June 2013; Palestine VAT rise

The planned 1% Israeli VAT rise to 18% has now been approved by the Israeli government, and has been signed into law.

The 18% Israeli VAT rate was first announced several weeks ago, and was scheduled for 31 May 2013.  However, this has now been modified by moving the VAT rise by two days to the Sunday, and so avoid the Jewish Sabbath.  This rate compares with the average EU VAT rate of over 21%.

As a result of the Israeli VAT rise, the neighbouring Palestinian Authority (PA) has also released plans to raise its VAT rate by 1% to 16%.  Under the terms of the financial administrative settlement between Israel and Palestine, the PA must track the Israeli VAT rate.