Israel’s Tax Authority has issued guidance on the increase in the standard VAT rate from 17% to 18%, effective 1 January 2025. The guidance provides an explanation of how to apply the correct VAT rate to transactions such as goods, services, imports, and real estate, including invoicing procedures and credit notes.
The applicable rate for goods and services depends on the accrual or cash basis and the delivery date.
For accrual-basis taxpayers:
- Supplies delivered before 1 January 2025 are taxed at 17%.
- Supplies delivered on or after 1 January 2025 are taxed at 18%, regardless of the payment date.
For cash basis taxpayers:
- Payments received before 1 January 2025 are taxed at 17%.
- Payments received on or after 1 January 2025 are taxed at 18%, regardless of the payment date.
