Israel Increases VAT Rate from 17% to 18% Starting January 2025

• Israel has increased the VAT rate from 17% to 18% effective from January 1, 2025
• The new VAT rate applies to all transactions in Israel and imports of goods where the tax liability date is on or after January 1, 2025
• Tax liability dates for transactions involving the sale of goods and services are specified in sections 22-29 of the Value Added Tax Law of 1975 and its amendments
• For sales of goods, tax is charged at the time of delivery to the buyer or when payment is received, depending on the specific conditions outlined in the law
• Small businesses with annual transactions not exceeding 2 million NIS including VAT are taxed on a cash basis, meaning VAT is applied when payment is received
• Manufacturers with annual transactions between 2,150,000 NIS and 3,800,000 NIS or those employing 6 to 17 people are also taxed on a cash basis
• For goods delivered to the buyer by December 31, 2024, VAT is charged at 17% even if payment is made after January 1, 2025
• For goods delivered after December 31, 2024, VAT is charged at 18% even if payment was made before January 1, 2025
• In cases where there is a gap between the order or payment date and the actual delivery date, the VAT rate is determined by the delivery date
• If full or partial payment is received before January 1, 2025, but goods are delivered after this date, VAT at 18% applies, and the seller must issue an additional invoice for the difference

Source: gov.il

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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