Israel Tax Guide

Israel

Currency: New Israeli Shekel

Foreign Exchange Control: None.

Accounting Principles: IFRS. Financial statements must be prepared annually and quarterly for publicly traded companies.

Business Entities: Principally, private and public traded companies, registered and unregistered partnerships and branches of foreign corporations.

Corporate Taxation

Residence: If activities are controlled or managed in Israel. A foreign corporation controlled by a new resident or returning resident will generally not be classed as a resident company for ten years.

Basis: Residents are taxed on their worldwide income and non-residents are taxed on Israeli-source income including capital gains from the sale Israeli assets.

Rate: 26.5% basic rate. If a company is classed as a preferred enterprise it can receive lower tax.

Foreign Tax: Israel pays tax credits on foreign taxes paid on non-Israeli source income.

Other: Investment and R&D incentives

Tax Year: Calendar year

Personal Taxation

Residence: Residents taxed on worldwide income, non-residents taxed on Israeli-source income (resident if centre of ‘vital interests’ is in Israel or >183 days spent in Israel in a year)

Rate: Progressive up to 50%.

Capital Gains: A variety of rates exist

Other: 2% surtax is applied to income over NIS 825,055.

Real property tax: also known as ‘property betterment tax’ is applicable to the sale of real property at varying rates.

Social security: paid by employees and employers

VAT: Standard rate of 18%

Member Firm: Artzi, Hiba & Elmekiesse – Tax Solutions Limited

Emails:
Ran Artzi:  artzi@artzi-hiba.co.il
Gadi Alimi:  alimi@artzi-hiba.co.il