Israel's tax system includes corporate income tax, value-added tax (VAT), withholding tax, national insurance contributions, capital gains tax, real estate tax, and customs duties. Businesses operating in Israel should ensure compliance with the relevant tax obligations. It is advisable to consult with a tax professional or refer to the official website of the Israel Tax Authority for the most accurate and up-to-date information on tax regulations and requirements. By understanding and fulfilling their tax obligations, businesses can operate successfully in Israel's dynamic business landscape and contribute to the country's economic growth.
Corporate Income Tax:
Israel levies corporate income tax on the profits earned by companies operating within its jurisdiction. The corporate income tax rate in Israel is currently 23%, as of the knowledge cutoff in September 2021. However, certain companies may be eligible for reduced tax rates or exemptions under specific government incentive programs or special economic zones.
Types of Business Taxes in Israel:
- Value Added Tax (VAT): Israel imposes a value-added tax (VAT) on the sale of goods and services. The standard VAT rate in Israel is 17%. However, certain goods and services may be subject to reduced rates or exemptions. VAT is collected at each stage of the supply chain and ultimately borne by the end consumer.
- Withholding Tax: Israel imposes withholding tax on various types of payments made to non-residents. This includes dividends, interest, royalties, and certain service fees. The withholding tax rates may vary depending on the nature of the payment and applicable tax treaties.
- National Insurance Contributions: Employers in Israel are required to contribute to the National Insurance Institute (NII) on behalf of their employees. National Insurance contributions are calculated as a percentage of the employee's gross salary and are intended to fund social security benefits, including healthcare, pensions, and unemployment benefits.
- Capital Gains Tax: Israel levies capital gains tax on the sale of assets, including shares, real estate properties, and intellectual property rights. The tax rates for capital gains depend on various factors, such as the type of asset, holding period, and the taxpayer's classification (individual or corporation).
- Real Estate Tax: Real estate tax, also known as property tax, is imposed on owners of real estate properties in Israel. The tax is based on the assessed value of the property and may vary depending on the location and type of property.
- Customs Duties: Customs duties are applicable to the importation of goods into Israel. The rates vary depending on the nature of the goods and are determined by the Israeli customs authority.
- Israeli Tax Authority Website: For detailed and up-to-date information on business taxes in Israel, it is recommended to visit the official website of the Israel Tax Authority. The website provides comprehensive information, forms, guidelines, and contact details for any tax-related inquiries.
Israel Tax Authority Website: Official Israel Tax Authority Website