Israeli VAT returns
VAT registered traders must file regular returns with the Israeli Tax Authority.
How often are Israeli VAT returns required?
The VAT return filing frequency depends on the business’ monthly turnover levels:
- Monthly: monthly turnover above NIS 1,490,000
- Bi-monthly: monthly turnover below NIS 1,490,000
What Israeli VAT can be deducted?
Tax payers may reduce the VAT they owe from their sales (output VAT) by any allowable VAT incurred on supplier invoices incurred (input VAT) in the provision of the taxable supplies. This includes import VAT charged on the arrival of goods into Israel.
Any input VAT incurred may be deducted for up to 6 months after the purchase invoice date.
Input VAT incurred on capital goods used within the business may also be deducted. However, there are tight restrictions on claiming VAT incurred on assets to be used (partially or wholly) in the furtherance of the business.
Staff entertainment expenses are not eligible.
There is limited scope for the recovery of pre-VAT registration costs. Tax payers must make a special application to the tax office.
What are the returns filings and payments deadlines for Israeli VAT?
VAT returns must be submitted by the 15th of the month following the reporting period end. Any VAT due should be remitted according to the same timetable, and may only be paid to approved Israeli banks.
In addition to the VAT return, tax payers with an annual turnover above NIS 2.5m are required to provide an electronic transaction report.
Reclaiming VAT credits
If the amount of input VAT exceeds the output VAT, the business may apply for the credit to be paid within 30 days of submission of the VAT return. The tax office may require the input invoices to be submitted as proof.
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