Tax
Residence-based taxation with a 23 percent corporate rate
The Income Tax Ordinance taxes residents on worldwide income and non-residents on Israeli-source income. Corporate tax is 23 percent, personal income tax is progressive to 47 percent with a surtax on high income, and VAT is 17 percent.
Key rules
- Jurisdiction — The State of Israel. Administered by the Israel Tax Authority.
- Deadline — Annual corporate tax return: generally by 31 May following the tax year, with extensions for represented taxpayers
- Deadline — Land appreciation tax reporting on a property disposal: within 30 days of the transaction
Governing law
- Income Tax Ordinance (New Version) 5721-1961
- Value Added Tax Law 5736-1975
- Law for the Encouragement of Capital Investments 5719-1959
- Land Appreciation Tax Law 5723-1963
In practice
Israel moved to residence-based worldwide taxation in the 2003 reform, replacing a territorial system. Corporate tax is 23 percent, and the Law for the Encouragement of Capital Investments provides substantially reduced rates for preferred enterprises and preferred technological enterprises, which is central to the taxation of the technology sector. Individuals face progressive rates to 47 percent plus a 3 percent surtax above a threshold. Real estate disposals attract land appreciation tax rather than ordinary capital gains tax, with purchase tax on acquisition. New immigrants and returning residents receive a ten-year exemption on foreign income and gains, which is a significant planning feature.