Good news for Israelis ordering products from shopping websites overseas: by the end of the week, an increase in the VAT exemption threshold on personal imports to $150 is expected to take effect, double the current limit of $75.
Finance Minister Bezalel Smotrich is set to sign the order on Tuesday mandating the increase. Once the order is published in the official gazette, the regulation will take effect within 24 to 48 hours, without requiring approval from the Knesset Finance Committee.
Smotrich’s decision to double the VAT exemption - initially proposing to raise it to $200 - has drawn sharp criticism, with opponents arguing it amounts to “election economics” at a time when the state budget deficit is expected to rise to 3.9%, instead of the originally planned 3.2%.
The entire professional leadership of the Finance Ministry opposes the move, which is expected to result in an annual loss of about 1.25 billion shekels in tax revenue, in addition to the roughly 1 billion shekels already lost each year due to the existing exemption on personal imports valued at up to $75.
In total, the estimated loss to the state treasury in 2026 would reach 2.25 billion shekels, equivalent to more than one-tenth of a percentage point of the national budget deficit. Estimates suggest that raising the exemption threshold will further increase the volume of personal imports from abroad, beyond the 52.8 million packages that arrived in Israel from overseas websites in 2025.
Shahar Turgeman, president of the Federation of Israeli Chambers of Commerce, and Dr. Ron Tomer, president of the Manufacturers Association of Israel, have strongly opposed the increase in the exemption threshold. They have even called for abolishing the $75 exemption altogether, citing severe harm to local manufacturing, shop owners and businesses in Israel as a result of doubling the VAT exemption.
This comes as Israeli merchants and consumers are required to pay 18% VAT on the same products when purchased locally. In recent days, merchants have been considering petitioning the High Court of Justice against the finance minister, demanding the cancellation of the increased exemption for personal imports.
Meanwhile, tens of thousands of street-level shops and small business owners have signed an appeal to the government demanding that it halt what they describe as a reckless order, which they say will harm only Israeli businesses while favoring Chinese and Turkish websites, “contrary to global trends.”