Your Taxes: How to do business in Israel in 2024 - opinion

• Published date: 08 March 2024
• Author: LEON HARRIS
• Publication title: Jerusalem Post, The: Web Edition Articles (Israel)

Business Tax Rates

For 2024, the regular company tax rate is 23%. The regular dividend tax rate is 30%-33% for 10%-or-more shareholders and 25%-28% for other shareholders, resulting in a combined tax burden on distributed corporate profits of 42.25%-48.41%, subject to any tax treaty.

The VAT standard rate is 17%.

Int'l Agreements

Israel has income tax treaties with 60 countries and is a party to US FATCA and OECD CRS information-exchange arrangements. Israel has free trade agreements with the US, EU, UK, Canada, Colombia, EFTA, Guatamala, Jordan, Mercosur, Mexico, Panama, South Korea, Turkey, the UAE, and Ukraine.

National Insurance

National insurance rates include:

Resident employees: 3.5%-12% Employers of resident employees: 3.55%-7.6%;

Freelancers: 5.97%- 17.83% (52% is tax deductible);

Not working: 9.61%-12% (52% is tax deductible) Monthly payment if there is no income: NIS 203.

Olim

New residents and senior returning residents (who lived abroad for 10 years) are generally exempt from Israeli tax on non-Israeli source income for 10 years. The exemption does not apply to income for work done in Israel.

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Olim also enjoy an exemption for 5-20 years regarding interest on foreign-currency time deposits of three months or more at an Israeli bank. On Israeli source income, new immigrants receive extra personal credits, which reduce taxes by NIS 242-726 per month for four and a half years.

Foreign Expatriates

Non-residents working in Israel lawfully in their field of expertise for an employer as "foreign experts," who are paid at least NIS 14,800 per month, may enjoy deductions for accommodation expenses and daily living expenses of NIS 360 for up to 12 months, provided they are invited by an Israeli employer that is not an employment agency.

Tax Registrations

A business must immediately register for Israeli tax purposes as soon as its activity starts.

Pay Tax As You Go

Every year, a business or investor will receive demands to pay VAT, payroll taxes, income tax, and tax installments on profits (Mikdamot). A business must register for Israeli tax purposes as soon as it becomes...