Value Added Tax is imposed in Israel on a sale or the provision of a service in Israel if the sale/transaction has a commercial character.
The rate of VAT in Israel is 17%.
Traders with an annual turnover of less than I.S. 107,692 in 2023 can register as "exempt dealers" with the tax authorities.
An exempt dealer does not pay VAT on his income and is not allowed to deduct input VAT.
Financial Institutions and Non-Profit Making Institutions
Financial Institutions such as banks and insurance companies, do not issue tax invoices for money they receive.The same is true for non-profit making institutions. The method of payment to the VAT authorities is different for these bodies.
VAT Exempt/ 0% VAT
There are a number of instances in which VAT is not charged.Among them are:
1. Export
2. Hotel accommodation and various services to tourists.
3. Air freight or sea freight to and from Israel.
4. Sale of unprocessed fruit and vegetables.
5. Renting premises for residential purposes.
6. The sale of an asset from which it was not possible to deduct the VAT at the time it was purchased.
Date of Report
The date for reporting to the VAT authorities is the 15th of the month for the preceding month.Thus for example on February 15, the return is made to the VAT Authorities for the month of January.
Businesses with an annual turnover less than a certain ceiling, report on the 15th of the month as well but the return they submit refers to the two months that preceded the date on which the report was made.
An exempt dealer files a VAT report once a year.
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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