I rarely quote in full from another blog. But rules are there to be broken. And in this case, I think that I have a great excuse.

Understanding modern taxation systems is beyond the capabilities of even your average accountant. To do so in Israel, a country where legislators rarely shirk from complicating the most simplest of procedures, is especially daunting.

My clients often ask me if I have a summary of the salient points. Now, for possibly the fist time, a good acquaintance of mine, Leon Harris, has done the seemingly impossible. He has almost codified the salient point of the Israeli corporate and commercial taxation levels for 2017.

For those of you with business dealings in the Holy Land, I suggest you read in full. For others, comparisons are often helpful. The following is copied directly from Leon’s appraisal.

Businesses:

The regular company tax rate is 24%.

The regular dividend tax rate is 30%-33% for 10%-or-more shareholders, 25%-28% for other shareholders, resulting in a combined tax burden on distributed corporate profits of 45%-49.08%,subject to any tax treaty in the case of foreign investors.

Preferred income derived by preferred industrial and tech enterprises is liable to company tax of 7.5 – 9% in development area A, elsewhere in Israel 16%, without time limit. Dividends are taxed at 4 %-20%. The resulting combined tax burden on distributed profits is 11.2% – 32.8% subject to any tax treaty.

The VAT standard rate is 17%. Exempt dealers must have annual revenues below NIS 98,707.

There are tax breaks for: capital gains of foreign resident investors, trust owned vehicles (TOV‘s), approved rental buildings, oil exploration and production, movie productions.

Real estate:

Home rental income of up to NIS 5,010 per month is exempt. Thereafter, several possibilities exist.

A multi-home tax applies from 2017 to the owners of 2.49 homes or more in Israel at the rate of 1% of a prescribed value but no more than NIS 18,000 per year, subject to various rules and exceptions.

A multi-home tax applies from 2017 to the owners of 2.49 homes or more in Israel at the rate of 1% of a prescribed value but no more than NIS 18,000 per year, subject to various rules and exceptions.

Real estate acquisition tax rates range up to 10% generally. For an Israeli resident purchaser with no other home in Israel, the first NIS 1,623,320 may be exempt from acquisition tax.

The gain from the sale of an only home in Israel by resident individual may be exempt from tax provided its value does not exceed NIS 4,456,000 (in 2016). Otherwise home sales are generally taxed at 25%. A partial exemption applies to the sale of up to two homes bought before 2014 and sold before the end of 2017 by a resident individual.

Foreign expatriates in Israel:

Israel’s tax treaties sometimes grant an income tax exemption for employees resident in those countries but working in Israel.

Otherwise, non-residents working in Israel lawfully in their field of expertise for an employer who are paid at least NIS 13,100 per month, may enjoy a deduction for accommodation expenses and a daily living expenses deduction of up to NIS 320 for up to 12 months as “foreign experts,” provided they are invited by an Israeli employer that is not an employment agency. But employers may be subject to a foreign workers’ payroll levy of 0% to 20%.