Israel Considers New Taxes on Flights, Property, and Purchases by 2027
Translated & summarized from Cursorinfo by baba
Israel is planning significant tax changes for 2027, including new levies on air travel and undeveloped land, and an "online VAT" system to combat fraud. These measures aim to raise an estimated 10 billion shekels annually for the state budget. Aviation taxes could add hundreds of shekels to long-haul flights, while the VAT reform will change how businesses remit taxes. Higher taxes on additional properties are extended until 2027. The Head of the Tax Authority warned that further revenue increases may be needed.
The story in 6 lines · by baba
- Israel plans new taxes on flights, undeveloped land, and VAT system changes by 2027.
- Aviation levies could add up to 274 shekels to long-haul flights, impacting families.
- An 'online VAT' system aims to collect taxes immediately, potentially raising 7.5 billion shekels.
- Owners of undeveloped land may face annual taxes of 1.5% to 2.5% of its market value.
- Higher taxes on second and subsequent home purchases are extended until February 2027.
- The proposed tax changes are expected to generate 10 billion shekels annually.
Israeli authorities are contemplating significant tax reforms set to take effect in 2027, aiming to bolster the state budget by an estimated 10 billion shekels annually. These proposed changes, developed by the Israel Tax Authority for the 2027-2028 budget period, could impact air travel, real estate, and everyday consumer transactions.
Aviation is expected to see a new "aviation levy" with costs varying by destination. Domestic flights might increase by approximately 12 shekels, flights to Europe by 58 shekels, and long-haul flights to the U.S. and East Asia by around 274 shekels. For a family of four flying to the U.S., this could mean an additional cost of 1,096 shekels if airlines pass the full charge to consumers.
The most substantial reform targets Value Added Tax (VAT) with the introduction of an "online VAT" system. This system would require businesses to remit VAT immediately upon transaction, rather than at the end of a reporting period. The goal is to curb tax fraud and evasion, with projections suggesting this system alone could generate 7.5 billion shekels annually. While not necessarily increasing the VAT rate, it will alter business cash flow.
Owners of undeveloped land may face a new annual levy ranging from 1.5% to 2.5% of the land's market value. This measure is intended to encourage development or sale of such properties. For land valued at 2 million shekels, the annual tax could be between 30,000 and 50,000 shekels.
Existing higher tax rates on second and subsequent home purchases, at 8% and 10%, will be extended until February 10, 2027. These rates apply to investment properties and do not affect first-time homebuyers.
Shai Aharonovich, Head of the Tax Authority, cautioned that further tax increases might be necessary, as the proposed 10 billion shekel package only partially addresses the state's projected 30-40 billion shekel funding gap. The proposals are still subject to government and legislative approval.
