Israel Caps Tax Break for New Taxis at $33,000

Israel's Ministry of Finance is introducing new regulations for the taxi industry, focusing on taxation and trade aspects. A draft decree outlines significant changes, including a cap on the purchase tax benefit for new taxis. Currently, taxis are eligible for an 8% purchase tax with no upper limit, allowing for substantial tax breaks on luxury vehicles. The new regulation will cap this tax benefit at NIS 120,000 (approximately $33,000 USD).

The ministry stated that this cap aims to focus the tax benefit on taxis used as work vehicles for public transport, setting a reasonable limit for the benefit on higher-priced taxis. The changes also redefine what constitutes a taxi for customs purposes, requiring the vehicle to be exclusively used as a taxi and registered under the name of the eligible taxi owner. Furthermore, individuals will be limited to acquiring only one taxi, with allowances for multiple taxis tied to the number of employed drivers. Taxis will also be required to operate for at least 240 days a year for public transportation.

These measures are also intended to combat fraud by taxi dealers. An investigation revealed that some dealers exploit the system by registering taxis under individuals who are not actual taxi drivers, subsequently selling the vehicles. The new decree aims to prevent such practices, which involve false declarations to customs. The regulations will also address the legal status of taxi dealers, recognizing them within the trade chain under specific conditions and customs supervision, initially as a temporary measure until the end of 2028.