Israeli tax law is changing regularly. There
were various amendments to the Israeli Tax Code, including the
reduction of tax rates. The following summarizes Israeli tax rates
and other tax information for 2016.
The Israeli Parliament published the Law for the Amendment
of the Israeli Tax Ordinance (Amendment 216), on 5 January
2016, which reduced the corporate income tax rate from 26.5% to
25%. The reduction entered into force on 1 January 2016 and the 25%
corporate tax rate will apply to income generated from that day
"Preferred Income" derived by certain industrial and
technology enterprises, in accordance with the Law for
Encouragement of Capital Investments, is liable to reduced
corporate tax 16% in the center of Israel, or 9% in development
area A, without any time limit.
The regular dividend tax rate in Israel is between 30%- 32% for
shareholders that hold 10%-or-more in the company that pays
dividends, and 25%-27% for other shareholders. These rates are all
subject to any applicable tax treaty signed by Israel. However,
dividend distributed from a company that has "preferred
income", would be taxed at 20% (instead of 25%-32%)
The Israel Tax Authority is negotiating a
treaty for prevention of double taxation with Australia.
Withholding tax rates on interest, royalties, or capital gains
paid to corporations based on the standard Israeli corporate income
tax rate should be reduced to 25% from 1 January 2016.
Value Added Tax
Reduction in the standard value-added tax rate in Israel, from
18% to 17% (came into effect on 1 October 2015).
Personal income tax
In 2016, the tax rates in Israel for employment and freelance
income are as follows:
The Israel Tax Authority announced that the
temporary Voluntary Disclosure Program will remain in effect until
June 30, 2016. Israelis with undeclared capital and income may
apply to the Israel Tax Authority under the Voluntary Disclosure
Program, in order to avoid criminal proceedings.
A number of tax rate increases were announced in the 2017 Budget Review on 22 February 2017. These may impact directly on investment yields and re-investment base of investors.
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