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VAT in Israel

October 1, 2015, the standard rate of VAT in Israel was decrease from 18% to 17%.

Read more about the recent VAT increase in Israel.

Value added tax or VAT is also known as goods and services tax or GST. VAT in Israel is an indirect tax or consumption tax levied on the added value. The tax is levied on a person who does not bear the total cost of the tax. As against sales tax, VAT in Israel remains neutral regarding the number of transactions between consumer and producer. VAT in Israel is levied when a service, sold or provided to the consumer, is commercial in nature. VAT in Israel is 18% as of today.

The Israel taxes system does not impose VAT on every transaction.  For example, tourists who are not levied VAT for hotel accommodation and related services. By default all rates on goods and services include VAT. For tourists, VAT in Israel is refunded for the many services specifically listed. These include all types of accommodation, car rentals with/without driver, organized tours and all domestic flights, meals in hotels and restaurants and on tour. There is a refund procedure that the tourist must adhere to in order to obtain refund on VAT in Israel.

VAT in Israel is not levied on sea and air freight to and from Israel, homes rented out as residence only, unprocessed fruits and vegetables. VAT is not levied on a sale where it is not possible to deduct VAT when it was purchased. In Eilat VAT is exempt for one and all, including the Israeli community and for goods and services utilized by tourists.