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Proposed 2021/22 budget: VAT registration and reporting requirements on non-Israeli digital service providers

Applying VAT registration and reporting requirements on non-Israeli digital service providers and sellers to the Israeli market

Following a 2016 draft bill that has yet to be enacted, it is again proposed to require digital, communications, radio and television non-Israeli service providers to be registered and report for VAT purposes if the recipient is not a VAT dealer, financial institution or a non-profit institution. Furthermore, it is proposed that a sale of low-value tangibles (that are not subject to customs duty, but rather only to VAT) by non-Israeli resident via an online store to such a non-VAT dealer, financial institution or a non-profit institution, will be required to be registered and report for VAT purposes in Israel.

As part of the authorities to be granted to the Minister of Finance under this law, the Minister shall have the authority to publish regulations with regards to the registration process, that will include the following principles: the foreign resident will not be required to open a business bank account in Israel; it will not be required to have a local representation in Israel; and it will not be required to establish an Israeli company.

Source EY

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