June 2008
The Israeli finance minister presented on June 11, 2008 his plan to reduce both, Israel corporate tax and personal income tax rates.
The current Israeli corporate tax rate of 27% would be reduced to 25% in 2009. From 2010 to 2014 the rate would be reduced by 1% each year, down to 20% in 2014.
The top income tax rate for individuals, currently 47%, would be reduced to a top marginal rate of 42% in 2014.
Other lower personal tax rates, currently 10% to 35% would also be reduced each year, starting 2009 to 2015.
The tax cut would be financed by imposing tax on employees receiving employer's contribution to advanced training funds from 1.1.2009.
Currently such contributions are excluded from the employee's taxable income.
2008 Income Tax Rates
January 2008
From 1.1.2008 income tax rates for individuals are 10%-47%, compared to a top marginal tax rate of 48% in 2008.
Israel's coporate tax rate for 2008 is 27% , compared to 29% tax rate in 2007. The VAT rate for 2008 remains the same as in 2007, 15.5%.
In 2008 new double taxation treaties with Croatia, Ethiopia and Belarus will come into force.
Negative Tax Reform
December 2007
The Israeli parliment approved on 18.12.2007 a new negative income tax reform.
According to the reform , taxpapayers earning low income, but more than IS 1,730 per month, will get a cash grant paid directly by the government. The grant is given to earners aged 23 years or more, having at least one child aged under 18. For earners aged above 55 years, the grant is given for children above 19 years too.
The monthly grant starts from IS 400 per a single parent, up to IS 800 per couple.
The tax reform for employees is effective from 2007, at first covering only an area of about 20% of Israel. By 2009 the reform would cover all the population. For self employed people the reform would start in 2008, as a tax credit brought forward for the next years.
Israel Taxes
January 2007
From 1.1.2007 Israel's corporate tax rate is 29%(previous rate-31%). The top marginal income tax rate for individuals is 48%(previous rate-49%).
According to Israel's new tax regulations there is a list including 12 types of transactions requiring advanced reporting by taxpayers to the Israeli Tax Authority.
The reporting should include names of the sides related and the sum of the transaction.
The list includes, among others, payment of management fees of over I.S. 2 millions, resulting in tax reduction and sale of asstes to close relatives priced over I.S 2 millions, resulting in a loss setoff within 2 years from the date of sale.
The reporting is effective for transactions dated 1.1.2007 onwards.
Israel V.A.T
June 2006
The Israeli finance minister announced on 18.6.2006 a new v.a.t. rate of 15.5%, replacing the current rate of 16.5%.
The new V.A.T rate would be effective from 1.7.2006.
Israel Income Taxes
January 2006
From 1.1.2006 the corporate tax in Israel is 31% (previous rate-34%).
The capital gain tax for individuals, including sale of shares, is 20%.
Israel Tax Authority
January 2006
From 1.1. 2006 Mr. Jacky Matza is the new director of Israel's Tax Authority, replacing the former director , Mr. Rob.
Israel Income Taxes 2005
September 2005
The Israeli parliament approved on 13.9.2005 new regulations for accelerated depreciation.
Machine and equipment bought from 7/2005 to 9/2006 would have 100% accelerated depreciation, instead of the general rates.
The depreciation rate relates to investment in the sectors of industry, building, agriculture and tourism.
Israel Tax Reform
July 2005
The Israeli parliament approved a new tax reform.
The main amendments are mentioned in our "MAY 2005" tax update.
Income Tax
July 2005
Israel's tax authority proposed to impose tax on trusts when both, the beneficiary and the creator of the trust, are Israeli citizens.
Tax Reform
May 2005
Israel's finance minister, Benjamin Netanyahoo announced new tax reform for the years 2005-2010, the reform is expected to be confirmed by the Israeli parliament, Knesset, by September 2005.
The reform includes:
Reduction of v.a.t rate, from 17% to 16.5%,starting 9/2005.
Reduction of corporate income tax from 34% to 25% by 2009.
Reduction of top marginal individual income tax rate,from current 49% to 44% by 2009.
Increase of income tax rate on stock exchange gains,from current 15% to 20% in 2006.
100% accelerated depreciation for investment in fixed assets from 9/2005 to 9/2006.
Exemption from capital gains for foreign investors,subject to certain conditions.
Income Tax
January 2005
From 1.1.2005 the new corporate income tax rate in Israel is 34% (previous rate-35%).
-Tax on real income from sale of shares in foreign stock exchanges is 15%, same as for sales in Israel stock exchange.
Israel Tax Pre-Ruling Procedures
December 2004
Mr. Eitan Rob, director of Israel's Tax Authority declared the inclusion of pre-ruling decisions in Israel, starting 1.1.2005.
The pre-ruling decisions should be given by Israel's Tax Authority within a time limit of 90-120 days.
The decisions would be published in the Tax Authority web site without revealing details of the taxpayer.
If agreed, the decision would oblige both sides, in case of disagreement, the taxpayer may apply to Israel's court.
Israel Income Tax
June 2004
The new corporate income tax rate for 2004 is 35% (previous rate-36%).
The rates for the following years:
2005-34%
2006-32%
2007-30%
V.A.T.
March 2004
From 1.3.2004 the new v.a.t. rate is 17%. ( previous rate - 18% ).
Israel Income Tax
July 2002
A major tax reform is effective from 1.1.2003
Main changes:
Change of the tax system relating to income abroad,personal basis,instead of territorial basis.
New capital gain rate-25%(individuals and companies)
Taxes on income from stock exchange gains:
2003, turnover tax (0.5%-1%)
1.1.2004 onwards-15% on real income.
10% tax on shekel deposits and debentures.
15% tax on income from rent&interest abroad.
Israel V.A.T.
June 2002
From 15.6.2002 onwards the new v.a.t. rate is 18%( previous rate - 17%).
