Israeli VAT rate increase – Please be informed that the Israeli Minister of Finance has issued a formal Order, according to which the VAT rate will be increased to 16.5% (replacing the 15.5% rate), as a temporary provision, which is effective from July 1, 2009 and until December 31, 2010. The order was approved by the Israeli Knesset (the parliament) on June 29, 2009. As in the case of any indirect tax, this new rate may affect “end users” in relation to Israeli real estate transaction, the supply of goods and the provision of services.
It should be noted that services provided by an Israeli resident to a foreign resident are subject to 0% VAT (and are not exempt). Similar tax treatment applies to “imports of services” – where the supplier of services is a foreign resident.
