Israel Tax Authority Proposes New Taxes to Boost State Revenue
Translated & summarized from Maariv by baba
Israel's Tax Authority plans new taxes to raise 10 billion shekels annually for the state. Proposals include a property tax on vacant land and real-time VAT collection, expected to generate 7.5 billion shekels. A travel tax and measures concerning investment property taxes are also under consideration, with recommendations due soon.
The story in 5 lines · by baba
- Israel's Tax Authority proposes new taxes expected to generate 10 billion shekels annually.
- A property tax on undeveloped land and real-time VAT collection are key proposals.
- Real-time VAT collection is projected to yield 7.5 billion shekels yearly.
- A travel tax is recommended, potentially adding 274 shekels per flight.
- Concerns exist over the expiration of increased purchase tax on investment apartments.
Israel's Tax Authority is preparing a series of tax measures for the incoming government, projected to generate an additional 10 billion shekels annually for state coffers. These proposals, some of which are slated for inclusion in the 2027-2028 budget's "Arrangements Law," were revealed by Tax Authority Director Shi Ahronovitch at a contractors' conference in Eilat.
Two immediate measures include a property tax on undeveloped land, set at 1.5%-2.5% annually, aimed at encouraging landowners to develop or sell their plots. The second is the implementation of real-time Value Added Tax (VAT) collection, where the 18% VAT will be transferred to the Tax Authority immediately upon transaction completion. This is expected to close loopholes related to fictitious invoices and yield approximately 7.5 billion shekels per year.
The Tax Authority is also addressing the potential expiration of an increased purchase tax on investment apartments, currently at 8%-10%, which is set to drop to 5% on February 28, 2027, unless legislation is changed. This decrease could reignite demand from property investors.
Additionally, the Tax Authority has recommended the introduction of a travel tax starting in 2027, estimated to add up to 274 shekels per flight, potentially generating 1.1 billion shekels annually. Ahronovitch also stated that recommendations for economic measures, including taxes on rental properties, will be finalized within two weeks, and that previously approved measures for 2025, such as not indexing tax brackets to inflation and increased national insurance and VAT, will remain in effect for 2027.
