jpost.com
Israel Increases Standard VAT Rate to 18%
Israel's standard VAT rate increased to 18% on January 1, 2025, impacting businesses and consumers through changes in invoicing and pricing for goods and services, with variations based on the transaction type and the seller's annual sales.
- What are the immediate impacts of Israel's VAT increase on businesses and consumers?
- Starting January 1, 2025, Israel's standard VAT rate increased from 17% to 18%. This affects businesses and consumers; businesses must adjust their invoicing to reflect the new rate, while consumers will pay more for goods and services unless they complete transactions before the new year.
- What are the potential long-term consequences of this VAT increase for the Israeli economy?
- Businesses should proactively review their accounting procedures to ensure compliance with the new VAT rate. Failure to do so could result in penalties. Consumers should be aware of the increased cost of goods and services and may choose to preemptively make purchases to take advantage of the lower rate before the deadline.
- How does the implementation of the new VAT rate vary depending on the type of transaction (goods, services, real estate)?
- The change in VAT rate will primarily impact businesses exceeding specific sales thresholds, particularly those using a cash basis accounting system or providing continuous services. The new rate will affect sales of goods based on the delivery date, except for specific business types where payment date determines the applicable rate.
Cognitive Concepts
Bias by Omission
The article provides a comprehensive explanation of the VAT increase and its implications for various transactions. However, it might benefit from including examples of how the changes affect average consumers more directly, beyond the general advice to "play safe". Additionally, while it mentions consulting tax advisors, it could benefit from a brief mention of resources available to the public for understanding the changes.
Sustainable Development Goals
The increase in VAT disproportionately affects low-income individuals who cannot recover VAT on purchases, potentially widening the income gap. While the article doesn't offer specific data on income distribution, the increased tax burden on essential goods and services will likely exacerbate existing inequalities.