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Significant developmentsTaxes on corporate incomeCorporate residenceOther taxesBranch incomeIncome determinationDeductionsGroup taxationTax credits and incentivesWithholding taxesTax administrationOther issues
Significant developmentsTaxes on personal incomeResidenceOther taxesIncome determinationDeductionsForeign tax relief and tax treatiesOther tax credits and incentivesTax administration
Value-added tax (VAT)
The 2025 current rate of VAT is 18%.
Exports of goods and certain services and various other transactions are zero-rated, and certain transactions are exempt.
Banks and other financial institutions pay VAT-equivalent taxes at the rate of 18% based on their total payroll and on profits.
Not-for-profit organisations pay VAT-equivalent tax (wage tax) at the rate of 7.5% of their total payroll.
Customs duties
Customs duty is imposed on certain products imported into Israel. The rates of duty depend upon their classification according to the Harmonised Customs Tariff and the country of origin. Israel has concluded free-trade agreements with the United States (US), Canada, Mexico, the European Union (EU), and the European Free Trade Association (EFTA).
Excise taxes
Israel imposes excise taxes on a variety of goods (e.g. gasoline and diesel fuel used for transportation, tobacco, alcohol). The excise taxes are levied item-by-item, and the rates vary.
Municipal tax
Municipal tax is levied annually on buildings by local municipalities based on the size, location, and purpose of the property.
Property taxes
Property taxes are generally imposed on the occupier of commercial and residential real property. Unoccupied property is generally taxed on the property's owner. The tax is imposed at the municipality level.
Real estate capital gains
Capital gains on real estate are subject to the Land Appreciation Tax Law. The law relates to any real estate in Israel, including houses, buildings, and anything permanently fixed to land; real estate rights; and leases for 25 years or more. Tax calculations closely follow the calculation of corporate tax on capital gains (see Capital gains in theIncome determinationsection).
The tax rate on the real gain is the applicable corporate tax rate (23% in 2026).
A special tax rate may apply with respect to real estate acquired prior to 1960.
Transfer tax
The purchaser of real estate is generally subject to acquisition tax at rates up to a maximum of 10% (the highest rate applies when the purchase price exceeds20,183,565Israeli shekels [ILS]).
Stamp taxes
There are no stamp taxes imposed in Israel.
Payroll taxes
There are no payroll taxes other than employer’s national insurance contributions (see below).
Employer’s national insurance contributions
Employers are obligated to pay national insurance contributions based on a percentage of each employee’s income on a monthly basis. Employers are responsible for withholding employees’ contributions from wages and remitting these together with the employer’s own contributions. The employer’s contribution rates (current as of January 2025) for Israeli-resident employees are 4.51%, up to monthly income of ILS 7,522, and 7.6% on the difference between ILS 7,522 and the maximum monthly income of ILS 50,695.
For non-resident employees, the employer rates are significantly lower and are 0.75%, up to monthly income of ILS 7,522, and 2.65% on the difference between ILS 7,522 and the maximum monthly income of ILS 50,695. The minimal national insurance payments for non-resident employees do not provide any retirement benefit for the non-resident but generally provides a certain element of work accident coverage.
When an irregular salary payment in excess of one quarter of the usual salary is made, special provisions apply to the computation of social charges by which the application of this payment is equally attributed to the current month and to the past 11 months.
Israel has social security totalisation agreements with 19 countries that may allow for an exemption from Israeli national insurance throughout the employment period of the employee in Israel.
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Israel contacts
Tax Partner, PwC Israel
+972 3 795 48 49
Senior Tax Manager, PwC Israel
+972 3 795 48 04
PwC Israel
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