January 2025 1% VAT rise Knesset approval
Israel’s government amended 2024 budget including a 1% VAT has been approved by the Knesset parliament on 11 March 2024. The new 18% VAT rate will come into effect from 1 January 2025.
The government had updated its 2024 budget to raise extra funding for the military conflict in Israel and Gaza.
The budget recast comes as Moody’s, the credit rating agency, downgraded Israel’s credit rating last week.
Sept 2012 VAT rises by 1% to 17%
Israel last raised its Value Added Tax by 1% to 17% from 1st September 2012.
This increase followed a rise three years previously from 15.5% to 16%. At the time, this increase was only intended to be temporary. However, the decline in export markets, especially the key Euro zone, meant this reversal was put off at the start of 2011.
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Israel’s application of VAT on consumption in Israel is extended also to “imported” intangibles or services provided to Israeli entrepreneurs by foreign suppliers. It may be collected in one of two ways: from the Israeli purchaser (provided that the purchaser is not an individual) or by requiring the foreign vendor to register in Israel and file VAT returns. In principle, a foreign entity that has a substantial presence in Israel should register for VAT and file VAT returns.
