Israeli Customer Charged VAT on Discounted Online Orders and Free Gifts

A customer named Yael was unexpectedly charged Value Added Tax (VAT) on two online orders from the international website KITCH, despite the final cost of each purchase being under $75. The issue arose because the store declared the full, original prices of the items on the customs declaration, not the discounted prices or the value of the free gifts included with the purchases. Yael had ordered cosmetic and hair care products during a Halloween sale, receiving a 28% discount and free items like a storage box, hair clip, and hair ties. Even after presenting receipts showing the final cost of one order at $60, the Israeli Tax Authority insisted on charging VAT, stating that gifts are taxable and that the discount was not properly accounted for on the declaration. The authority initially claimed the discounts might be individual, which are not always considered for tax purposes. However, the Tax Authority later clarified to ynet that the initial rejection of Yael's complaint was due to a lack of proof that the sale was a general promotion. They stated that if Yael can provide evidence, such as a screenshot of the promotional email, that the Halloween sale and gifts were offered to all customers, she may be eligible for a refund. The primary problem stemmed from the seller declaring the pre-discount prices and gift values on the customs forms, leading to a declared value of $111.86 for the first package and $91.87 for the second. Yael paid 64 shekels in VAT for the first order and 54 shekels for the second, totaling 118 shekels she believes she should not have paid. The Tax Authority advised Yael to submit a refund request with proof of the general nature of the discount and gifts to have the case reconsidered.