ISRAEL TAX HIGHLIGHTS (AN INTRODUCTION)
ISRAEL CORPORATE TAX RATE
The Corporate Tax Rate has been downgraded to 25 % starting from 2017.
Corporate Tax Rate in Israel averaged 29.59 % from 2000 until 2016, reaching the high level of 36.00 % in 2001 and a record low of 24.00 % in 2011.
Israel is a lot less taxing than it used to be in the past and also a bit less than many other countries.
BUSINNES
Please find here below some first comments made by Gianmauro Nigretti of Sherman Nigretti Chartered Accountants & Tax Advisors
The ordinary company income tax rate is 24%.
The dividend tax rate is 30%-33% for 10%-or-more shareholders, 25%-28% for other shareholders.
Preferred income derived by preferred industrial and tech enterprises is liable to company tax of 7.5 – 9% in development area A, elsewhere in Israel 16%, without time limit.
Dividends are taxed at 4 %-20%. The resulting combined tax burden on distributed profits is 11.2% – 32.8% subject to any tax treaty.
In Israel, the sales tax rate is a tax charged to consumers based on the purchase price of certain goods and services.
Revenues from the Sales Tax Rate are an important source of income for the government of Israel.
The VAT standard rate is 17%.
Sales Tax Rate in Israel averaged 16.64% from 2006 until 2016, reaching an all time high of 18.00 % in 2013 and a record low of 15.50 % in 2007.
INDIVIDUALS
In Israel, the Personal Income Tax Rate is a tax collected from individuals and it is imposed on different sources of income like labour, pensions, interest and dividends.
The 2017 monthly income tax rates for employment and freelance income are :
| TAXABLE INCOME – FREELANCE INCOME (NIS) | RATE (%) |
| On first NIS 6.220 | 10% |
| On NIS 6.221 – NIS 8.920 | 14% |
| On NIS 8.921 – NIS 14.320 | 20% |
| On NIS 14.321 – NIS 19.900 | 31% |
| On NIS 19.901 – NIS 41.410 | 35% |
| On NIS 41.411 – NIS 53.533 | 47% |
| Over NIS 53.533 | 50% |
The highest Personal Income Tax Rate in Israel is 50 %. Personal Income Tax Rate in Israel averaged 48.15 % from 2004 until 2016, reaching 50.00 % in 2013 and a low record of 45.00 % in 2010.
PERSONAL TAX CREDITS
Israeli residents are entitled to personal tax credits, which are known as credit points. Each credit point is currently worth NIS 215 per month.
A man generally receives 2.25 credit points, and a woman receives 2.75 credit points.
If a couple both work and opt for separate tax calculations, the wife will receive an extra credit point for each child under 18 years of age and half a credit point for a child born or reaching 18 in the tax year.
The husband receives extra credit points for children aged up to 4.
NEW RESIDENTS
New residents and senior returning residents (who lived abroad 10 years) generally enjoy a 10 year Israeli tax exemption for non-Israeli source income and capital gains.
This does not apply to work made in Israel. They also enjoy an exemption for 5 – 20 years regarding interest on Patach foreign-currency time deposits of three months or more at an Israeli bank.
On Israeli source income, new immigrants receive an extra three credit points in the first 18 months after their immigration, two extra credit points in the next 12 months and one extra credit point in the next 12 months.
