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ROY KARIV LAW FIRM | רועי קריב משרד עורכי דין

KLF
Israeli Tax Law Firm

Indirect Taxes

The Value Added Tax has been in effect in Israel since July 1, 1976. The VAT rate is 17%, with no lower VAT rate available, albeit there is a zero rate and exclusions in some cases. A VAT-registered business must follow the VAT Act's provisions and record-keeping procedures. Our firm's indirect tax division has the expertise, skill, and experience in a wide range of legal entities, with a focus on the ramifications of any indirect taxes: vat, excise, customs, or purchase tax. The department provides a wide selection of one-of-a-kind solutions, including customer optimization, by pre-planning an activity structure to optimize the legal rights to which it is entitled.

Our Services

  • Providing the customer with a number of taxes alternatives. As a result, he is able to choose the best course of action for himself.
  • pre-rulings
  • Escort, represent, and negotiate on behalf of our customers before the Israeli tax authority
  • Legal representation in court

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What is Value added tax

Value-added tax (VAT) is imposed on any transaction executed in Israel, on import of goods by every person, and provision of services, at a single rate from the sum of the transaction or the price of the goods. The tax also applies to any random transaction executed by any person, even if he is not a registered dealer, provided that the transaction is commercial and involves the selling of goods or real estate or provision of services and that the buyer is a registered dealer.

VAT in Israel for international digital service providers

The Israeli government has included plans in its 2021-22 budget to charge VAT from non-resident providers of digital or electronic services to its civilian population, which is expected to come into effect on January 1, 2022, at the earliest.

It should be noted that under current Israeli rules, non-resident digital service providers with an "Israeli economic presence," as defined in the tax authorities 2016 circular, must register for VAT in Israel, establish a tax agent in the country, and file regular VAT returns (as a foreign taxpayer in Israel). According to the circular, having a considerable number of Israeli clients, a website designed for the Israeli market and in the Hebrew language, allowing Israeli payment methods, promoting Israeli consumers, and so on constitutes an economic presence in Israel.

NON-PROFIT ORGANIZATIONS (NPO)

Non-profit organizations are exempt from VAT but are generally If a non-profit organization purchases goods or services, it is not entitled to a VAT refund. It is important to understand that if the NPO generates business-related income, e.g., for services rendered, this business income is subject to VAT.

NPO is subject to a special “salary tax” on the total gross amount paid to their employees, currently set at 7.5 percent.