Taxation Hurdle Delays Tesla's Full Self-Driving Rollout in Israel

Tesla's advanced driver-assistance system, known as Full Self-Driving (FSD), which still requires driver supervision, has received approval for testing in Israel. However, Israeli Tesla owners cannot yet activate the system due to an unexpected taxation issue.

Tamir Dortal, host of the podcast "Al HaMashma'ut," identified the Tax Authority as the primary obstacle, stating that while the Ministry of Transportation has approved tests, the Tax Authority's stance on payments for the FSD feature is blocking its wider implementation. Dortal explained that the core question is whether the monthly fee for enabling FSD capabilities should be subject only to Value Added Tax (VAT) or also to purchase tax, similar to certain vehicle accessories.

Previous reports had also highlighted taxation as a key issue requiring resolution before the service could be expanded in Israel. The matter was reportedly brought to the attention of Finance Minister Bezalel Smotrich, who, during an interview on Dortal's podcast, called the situation "absurd" and promised it would be addressed. Dortal, however, claims that no solution has materialized since then and that government officials are ignoring the issue, vowing to continue pressing for a resolution.

This taxation challenge comes despite previous statements from Transportation Minister Miri Regev indicating that FSD was "coming soon" and that the country was in the "final stretch" of approvals. Elon Musk has also previously commented on the potential arrival of the system in Israel, emphasizing that its rollout depends on local regulators. Meanwhile, Israeli Tesla owners continue to wait for the FSD feature to become fully available to them.