VAT Standard rate
VAT standard rate in Israel in 2024 is 17%, which applies to supplies of all goods in Israel and import, except activities taking place in the Eilat Free Trade Zone (FTZ). Export is zero-rated.
VAT registration threshold
There is no registration threshold in Israel. Businesses which provide taxable supplies must register for VAT purposes starting from the fisrst day of such activity.
Tax representative
Businesses must appoint local tax representative in Israel within 30 days from the beginning of taxable activity.
Registration procedure
For VAT registration in Israel businesses must submit the completed and signed registation form with following documents to the tax authority:
- Certificate of registration in the Registrar of Companies;
- Protocol of those authorized to sign documents;
- Copy of the indentification documents of directors of the company;
- Agreement of the purchase/lease of the place of business;
- Company bank account reference;
- Information about the property of the company (sources of financeing, the amount of the investment, and the estimated turnover of transactions).
Additional information may be requested by the tax office. In case of positive decision business will get the VAT Certificate.
During the registration process, a business may be defined as an “exempt dealer” if their expected turnover is less than a prescribed amount (approx. EUR 30,000).
Deductible VAT
Businesses can reclaim input tax by deducting it from output tax. Expenses that are not relevant to the business cannot be claimed for deduction. Input tax is not recoverable to the businesses that are not registered for VAT purposes in the Israel.
Keeping records
The period of keeping records in Israel must be at least seven years.
VAT returns filing and payment date
VAT returns in Israel must be submitted electronically on monthly or bi-monthly basis, depending on the annual turnover of the business. The deadline for filing and payment is the 15th day of the month following the reporting period. Businesses who file and pay online are allowed to do it due to 19th day of the month following the reporting period
Penalties in Israel
Penalty for late registration – 1% from the taxable turnover amount.
Fines and penalties may be applied for the late submissions of VAT returns and payments.