Anyone who ordered a package from abroad worth more than $75 that has not yet arrived in Israel or been released from customs will have to pay 18% VAT (Value Added Tax) starting Tuesday, following the Knesset's cancellation on Monday night of an order previously signed by Finance Minister Bezalel Smotrich. Smotrich signed an order at the end of February raising the exemption to $130 after failing to convince the Knesset to raise the amount to $150.
According to the Tax Authority’s decision, and in line with the law, starting Tuesday, any package whose contents are worth more than $75 and has not yet been released from customs will be charged VAT on the full value of the goods, not only on the amount above $75.
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The date a package is released from customs is the relevant date for determining the VAT rate owed
(Photo: Photo: Jorge Novominsky)
This means that someone who ordered products for personal import worth $100, for example, will pay 18% VAT, about 50 shekels in this case, on the entire amount, not just on the $25 above the threshold, which has now returned to its previous level of $75.
Those who ordered their package before Monday night’s Knesset vote will also have to pay the tax, because under the law, the date a package is released from customs is the relevant date for determining the VAT rate owed.
The cancellation of the order followed pressure from Israeli retailers, who argued that raising the VAT exemption harmed local commerce, since every product bought in Israel, except in Eilat, is subject to VAT. They said the expanded exemption was unjustified because it effectively helped businesses in China or the U.S. while hurting the Israeli economy.