Question 1

What is the standard VAT (מע״מ) rate in Israel?

Accepted Answer

The statutory standard rate of Value Added Tax (Ma'am) in Israel is 17%, applicable to most domestic sales of goods and services.

Question 2

How do you extract 17% VAT from a gross price?

Accepted Answer

To extract 17% VAT from a gross price, divide the gross price by 1.17 to determine the net price, then subtract the net price from the gross price to find the exact VAT amount (or multiply gross by 17/117).

Question 3

Why is Eilat exempt from VAT (0% מע״מ באילת)?

Accepted Answer

Under the Free Trade Zone Law (Eilat) 1985, retail sales of goods and tourism services consumed within the city of Eilat are exempt from the standard 17% VAT to stimulate tourism and local economic growth.

Question 4

Which goods and services qualify for zero-rate (Ma'am Efes) or exemption?

Accepted Answer

Exports of goods, intellectual property, and services to foreign residents qualify for zero-rate (0% VAT with full input recovery). Unprocessed fresh fruits and vegetables and residential rental leasing are statutory VAT-exempt.

Question 5

Can registered businesses (עוסק מורשה / חברה בע״מ) reclaim input VAT?

Accepted Answer

Yes, VAT-registered dealers can claim back 100% of input VAT on legitimate business purchases and operating expenses via their bi-monthly or monthly VAT return (Form 875).

Israel VAT (Ma'am מע״מ) Calculator

Amount & Calculation Mode

Statutory VAT Ledger & Accounting Audit