Department of Customs and V.A.T. Notice To the Public

Changes in Value Added Tax Rate In accordance to an order regarding the matter, the Value Added Tax (V.A.T.) rate will increase from 17% to 18% beginning on June 16, 2002. The following are general guidelines regarding V.A.T. on different kinds of transactions: 1. Delivery of Goods In the case of a sale of goods, liability to tax will accrue upon delivery of the goods to the purchaser, therefore : Goods delivered to the purchaser before June 15, 2002, the transaction will be imposed with 17% V.A.T. Goods delivered after June 15, 2002, the transaction will be imposed with 18% V.A.T even if payment for the transaction was fully or partially paid for before the aforementioned date. 2. Delivery of Goods in Installments In cases of delivery of goods in installments, each installment is seen as an independent one, and therefor installments delivered before June 14, will be imposed with a rate of 17% V.A.T., while installments delivered after June 15, 2002 will be imposed at a rate of 18% V.A.T.. 3. Sale of Real Estate In the case of a real estate transaction (including apartment, and others), the liability to tax shall accrue at the time of payment or when the real estate is placed at the purchaser's disposal or made available for use by him, whichever is the earliest, therefore: For real estate sold, and not made available to the purchaser before June 15, 2002, every payment conducted before June 14, 2002 will be imposed with a V.A.T. rate of 17%. Every payment conducted after June 15, 2002 will be imposed with a V.A.T. rate of 18%. Real estate which was sold and made available to the purchased before June 15, 2002 - the full value of the transaction will be imposed with 17% V.A.T. even if full payment has not been paid. 4. Services Provides Which Are Not Imposed With Tax Based on Wages For a One Time Service - V.A.T. is imposed according to the tax rate which is valid on the day of the service, that is: A service provided before June 15, 2002, will be imposed at a rate of 17% V.A.T. even if payment was received after June 15, 2002. A service provided after June 15, 2002, will be imposed at a rate of 18% V.A.T. Services Provided Based on Monthly Settling of Accounts Services such as guarding, cleaning, shipment etc. in which the parties base their transaction on a monthly settling of accounts will be imposed with the V.A.T. rate valid on the relevant time period, therefore, Service related to the period between June 1 and June 14, 200 will be imposed at a 17% V.A.T. rate. Services relating to the period between June 15, and June 30, 2002 will be imposed with a 18% V.A.T. rate In cases where the time period that the service was provided can not be determined during the aforementioned month, the transaction will be imposed equally, that is on 50% of the transaction 17% V.A.T. will be imposed and 50% of the transaction will he imposed at a rate of 18% V.A.T. 5. Transactions Imposed with the Tax Based on Wages Transaction imposed with tax based on wages, are imposed at the V.A.T. rate which is valid on the date of payment, therefore every payment paid after June 15, 2002 will be imposed with a 18% V.A.T. rate. Therefore, every payment paid for those transaction before June 15, will be imposed with a 17% V.A.T. rate. 6. Importation of Goods A V.A.T. rate of 18% will be imposed on goods released from Customs beginning on June 15, 2002. 7. Returns Periodic returns filed before June 15, for the month of June 2002 (for dealers submitting monthly returns) and for the months of May-June 2002, (for dealers submitting bimonthly returns), must include the aggregate amount of the transaction conducted during the aforementioned dates and the aggregate transaction tax which relates to transaction in which the imposed tax is 17% and transaction imposed with 18% V.A.T. 8. Not Profit Organizations and Financial Institutions Beginning on June 15, 2002, a wage tax of 9% (instead of 8.5%) will be imposed on non profit organizations, and a wage tax of 18% (instead of 17%) will be imposed on financial institutions. 9. For further information please contact the regional V.A.T. office closes to your business or place of residence.

	Revised 06.06.2002 Copyright ©2002, The State of Israel. All Rights Reserved. (Terms of Use)