Israel introduces VAT on supply of digital services by foreign providers

31 March 2016

The Israeli Government has drafted a bill which imposes a charge of VAT at 17% on the sales of e-services to consumers by non-resident businesses.

At present, non-resident businesses providing digital services in Israel do not have to charge VAT on their sales. However, in an effort to remove the unfair advantage given to non-resident companies , the Israeli Government has proposed that VAT at 17% will be applied on these types of transactions.

Israel have yet to confirm the date that this will be implemented however they have confirmed that if accepted, the new tax will apply to a range of electronic services including streaming games, music, apps, films, e-books, e-journals and internet services.

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