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Value Added Tax Law, 5736-1975

חוק מס ערך מוסף, תשל"ו-1975

Published: 1976-01-06Consolidated Hebrew text as of 2026-07-13 · Last amended 2026-03-31✓ Amendment status checked against the Knesset legislation record on 2026-09-29
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More

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Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.

The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.

This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.

Chapter III: The Price

In a transaction§

7.

The price of a transaction is the agreed consideration, including –

(1)any tax, levy, fee or other compulsory payment imposed on the transaction otherwise than under this Law, unless imposed by law on the buyer, but excluding tax on capital gains under the Income Tax Ordinance [New Version] and tax under the Real Property Appreciation Tax Law, 5723-1963;
(2)any other expenditure in performing the transaction that under the agreement the buyer is required to reimburse, including a commission or interest in respect of payment by instalments, interest or any other payment in respect of default in payment and compensation for breach of the agreement where it is not accompanied by cancellation of the transaction, and including the price of packaging.

In a sale and service together§

8.

In a transaction comprising an asset and a service, the price of all of them together shall be the price of the transaction.

In transactions to which section 19 applies§

9.
(a)The price of a transaction as referred to in section 19(a) is the commission or other consideration received by the service provider from the person who supplied to the service provider the item sold.
(b)The price of transactions that are regarded pursuant to section 19(b) as the provision of a service is the difference between the aggregate purchase price of the securities, instruments or foreign currency that are the subject of the transactions in a particular reporting period and the aggregate selling price thereof in that reporting period; for this purpose, the amount of the repayment or redemption of instruments shall be regarded as their selling price.

In a service in respect of which a fee is paid§

9a.

The price of a service transaction in respect of which a fee or other consideration is paid under law is the fee or the other consideration.

In a stock exchange listing transaction§

9b.

The price of a transaction that is the listing on a stock exchange of securities issued by a real property association is the value determined for that transaction for the purpose of the Real Property Appreciation Tax Law, 5723-1963, and the date of payment is the date for the payment of appreciation tax under that Law.

In special cases§

10.

Where the price of a transaction is affected by a special relationship between the parties, or where no price has been fixed for it, or where its consideration is wholly or partly not in money, its price shall be the price that would have been paid for it under normal conditions; where the price cannot be determined in that manner, its price shall be the cost of the asset or service plus the customary profit in that branch.

Goods on importation§

11.
(a)The price of goods on importation, excluding goods to which subsection (b) applies, is their value as referred to in sections 129 to 134a, as applicable, of the Customs Ordinance [New Version] at the time of payment of the tax, plus the customs duty and any other tax or levy applicable to the importation.
(b)The price of goods as referred to in section 26(b) is the consideration in Israeli pounds of the foreign currency at the buying rate thereof at the time of purchase of the currency in payment of the consideration or at the time of its transfer abroad for the purpose of payment, whichever is earlier; if no foreign currency was purchased or transferred as aforesaid – the price of the goods shall be the price as referred to in section 7.
(c)Where goods were exported from Israel and, while outside Israel, were repaired, renewed or improved, and were returned to Israel, their price on importation is the value of the repair, renewal or improvement plus the payments as referred to in subsection (a).

In a sale before release from customs authority supervision§

11a.

The price of a transaction for the sale of imported goods before their release from the supervision of the customs authority, where the import declaration is drawn up in the name of the buyer, is the agreed consideration less the price of the goods for the purpose of the tax on their importation.

Treatment of a donation, support and the like§

12.
(a)A donation, support or other assistance (hereinafter – receipts) received by a dealer shall be regarded as part of the price of his transactions; this provision shall not apply to classes of receipts or classes of dealers determined by the Minister of Finance.
(b)The Minister of Finance may determine the treatment of the receipts for the purposes of invoices, deductions, recording in the dealer's books of account and the like.

Rules for calculating the price§

13.

The Minister of Finance may determine rules in relation to –

(1)the calculation of the price pursuant to section 10;
(2)the calculation of the price of packaging;
(3)the circumstances and conditions under which an amount given as a deposit or as a security shall be regarded as part of the price of the transaction in which they were given.

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Chapter IV: Place of Transaction

In a sale§

14.

An asset shall be regarded as sold in Israel if the asset was in Israel at the time of its delivery to the buyer, or if it was exported from Israel, and in the case of an intangible asset – if the seller is a resident of Israel.

In the provision of a service and in the management of an activity§

15.
(a)A service shall be deemed to have been provided in Israel if any one of the following conditions is fulfilled:
(1)it was provided by a person whose business is in Israel; a person who has an agent or branch in Israel shall be deemed, for this purpose, to be a person whose business is in Israel;
(2)it was provided to a resident of Israel, to a partnership in which the majority of the rights are held by partners who are residents of Israel, or to a company that is regarded as a resident of Israel for the purposes of the Income Tax Ordinance [New Version];
(3)it was provided in respect of assets situated in Israel.
(b)An activity shall be deemed to be managed in Israel if any one of the following conditions is fulfilled:
(1)it was conducted wholly or for the most part in Israel;
(2)it was managed by a person whose principal activity is in Israel and the activity falls within the sphere of activity that he manages;
(3)it is the part that was managed in Israel of an activity the majority of which was managed outside Israel.
(c)The Minister of Finance may prescribe, generally or in respect of a particular service or activity as referred to in subsections (a)(1) and (2) and subsections (b)(1) and (2), that only the part that was provided or conducted in Israel shall be regarded as if it were provided or conducted therein.

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Chapter V: The Person Liable to Pay the Tax

The person liable to pay the tax§

16.

The following persons are liable to pay the tax:

(1)in a sale – the seller;
(2)in a service – the provider of the service;
(3)in import, including the import of intangible goods – the owner of the goods as defined in the Customs Ordinance [New Version];
(4)in the activity of a non-profit organisation or a financial institution – the non-profit organisation or the institution.

Agent§

17.
(a)A dealer who sells an asset or provides a service to a buyer through an agent acting in the name of the dealer shall be regarded as the seller or the provider of the service to the buyer, and the agent shall be regarded as providing a service to the dealer, if the fact of the agency and the name of the dealer as principal were stated on the documents that the agent issues to the buyer; if not so stated, the asset shall be regarded as having been sold or the service as having been provided twice: once from the dealer to the agent and once from the agent to the buyer.
(b)A dealer who sells in his own name an asset belonging to a certain person, with whom he has contracted for that purpose, shall be regarded as the seller of the asset to the buyer, and that certain person shall be regarded as the seller of the asset to the dealer.
(c)A dealer who purchases an asset or receives a service on behalf of another dealer shall state, on a document that he issues to the seller or the service provider in the ordinary course of his business, the fact of the agency and the name of the other dealer as principal; if he has not done so, he shall be regarded as purchasing for himself.

Liability of an appointee to pay tax§

18.
(a)In this section, "appointee" – a person appointed by law to the office of executor, liquidator, receiver, guardian, estate administrator or trustee, or another office holder appointed by a court to act in the assets of the dealer.
(b)An appointee who, by virtue of his office, sells an asset or provides a service in the name of a dealer shall be subject, in respect of liability for the tax, to the following provisions:
(1)he shall be liable to pay the tax in the same manner as the dealer is liable, in place of the dealer;
(2)he shall be regarded as providing a service to the dealer.
(c)Where the appointee has received consideration in respect of a transaction as referred to in subsection (b), the tax in respect of the transaction shall be paid out of the consideration received therefor, before its transfer for any other purpose, and the tax shall not be regarded as part of the consideration.
(d)Where the appointee has reported the transaction and paid the tax thereon in accordance with the provisions of this Law, the dealer shall be regarded as having reported the transaction and paid the tax thereon.
(e)The Director may prescribe rules regarding the manner of issuing invoices by the appointee and regarding the manner of reporting by him.

Seller of stamps, tokens, bills, securities and the like§

19.
(a)A dealer whose business is the sale of postage stamps, telephone tokens, revenue stamps, pre-stamped bill of exchange forms and the like at the price stated thereon shall be regarded as providing a service to the person who supplied them to him for sale.
(b)A dealer whose business is the sale of securities or other negotiable instruments, including the purchase of such securities and instruments for the purpose of receiving their redemption or realisation proceeds, or whose business is the sale of foreign currency, shall be regarded as having the sale or receipt of redemption or realisation as a brokerage service that the dealer performs between the person who sold them to him and the person who purchased them from him or redeemed or realised them.

Authority to pay tax in place of the person liable thereto§

20.

A person who is not liable to pay the tax may, with the consent of the Director and subject to the conditions he has prescribed, assume the obligation of payment, and from the date of consent he shall have the same status as the person liable to pay it.

Imposing liability on the buyer to pay the tax§

21.

The Minister of Finance may prescribe, in respect of classes of dealers or classes of transactions, excluding a casual transaction as referred to in paragraph (3) of the definition of "casual transaction", that the buyer shall be liable to pay the tax, in whole or in part, or may prescribe classes of buyers who shall be liable for the tax, in whole or in part, and may prescribe conditions for the imposition of the obligation on the buyer, and may further prescribe that other obligations which, under the provisions of this Law and the Regulations made thereunder, apply to classes of taxable persons shall apply to the buyer; in respect of obligations imposed on the buyer as aforesaid, the seller or the service provider shall be exempt therefrom, unless the Minister of Finance has prescribed otherwise and subject to the conditions he has prescribed.

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Chapter VI: Time of Tax Liability

In the sale of goods§

22.
(a)In the sale of goods, the tax liability arises upon their delivery to the buyer; if the goods are delivered in parts, the liability arises in respect of each part delivered. For this purpose – "delivery" as defined in section 8 of the Sale Law, 5728-1968.
(b)Notwithstanding subsection (a), in a transaction for the sale of goods by any of the following, the tax liability shall arise upon receipt of the consideration and in respect of the amount received:
(1)a dealer whose transaction turnover does not exceed two million New Israeli Shekels;
(2)a dealer in respect of whom the conditions set out in item 2(c) of Schedule A to the Income Tax Regulations (Bookkeeping), 5733-1973, are fulfilled.

In consignment§

23.

Where an asset is delivered by a certain person to another person for the purpose of selling it, and it has been agreed in writing that no more than ten percent of the consideration, or a higher percentage prescribed by the Minister of Finance for classes of dealers or transactions, shall be paid before the other person sells the asset and that if he does not sell it he is entitled to return it, the tax liability in respect of the sale from the certain person to the other person shall arise at the time the other person sells the asset; the same shall apply to a sale as aforesaid in which the agreement was made orally, if it has been proved to the satisfaction of the Director that, according to commercial custom, it is of the type of sales made under the said conditions without a written agreement.

In a service§

24.

In a service, the tax liability arises upon receipt of the consideration and in respect of the amount received.

In use for personal purposes§

25.

In use for personal purposes, the tax liability arises –

(1)in respect of goods – upon their appropriation for such use;
(2)in respect of real property – upon taking possession thereof for such use, upon the commencement of the use, or upon registration in the Land Registry, whichever is the earliest.

In import§

26.
(a)In the import of goods, other than goods as referred to in subsection (b), the tax liability arises upon their release from customs control.
(b)In the import of intangible goods and in the import of newspapers, periodicals and other printed matter imported by post, the tax liability arises upon the purchase of foreign currency from a financial institution for the purpose of payment for their acquisition, or upon the transfer of foreign currency to the seller, whichever is the earlier, and if no foreign currency has been purchased or transferred as aforesaid – upon the giving of the consideration.
(c)The Minister of Finance may make Regulations in respect of subsection (b), including regarding the collection of the tax by the financial institution and regarding the time and manner of its transfer, and including regarding the payment of interest for failure to transfer the tax by the prescribed date.
(d)(Repealed)

In expropriation§

27.

In expropriation, forfeiture or confiscation, the tax liability arises upon payment of the compensation or the consideration.

In a real property transaction§

28.
(a)In a real property transaction, the tax liability arises upon placing the real property at the disposal of the buyer or for his use, or upon the registration of the real property in the name of the buyer in a register maintained pursuant to law, whichever is the earlier.
(b)In construction works, the tax liability arises upon the completion of the work or upon placing the real property on which the work was carried out at the disposal of the buyer or for his use, whichever is the earlier; where part of the real property is placed at the disposal of the buyer, the liability in respect of that part arises from that time.
(c)In this section, "construction works" – including excavation, demolition, sewage and drainage works, laying of pipes, paving of roads and paths, land preparation and the like.

In special cases§

29.

Notwithstanding the provisions of this Chapter –

(1)in a transaction to which section 28 applies and in other classes of transactions prescribed by the Minister of Finance – if any amounts have been paid on account of the consideration before the time of liability under this Chapter, the liability in respect of each amount so paid shall arise at the time of its payment;
(1a)in a service provided in a transaction whose price is influenced by special relations between the parties, or for which no price has been fixed, or whose consideration in whole or in part is not in money, and in a service provided by a dealer whose transaction turnover exceeds NIS 15,000,000 per year and who is subject to the obligation to keep account books under Schedule XI to the Income Tax Regulations (Bookkeeping), 5733-1973, the tax liability shall arise upon the provision of the service; where a service as aforesaid is provided in parts, the liability shall arise in respect of each part provided, and in a service whose provision is continuous and whose parts cannot be separated – the liability shall arise in respect of each amount paid on account of the consideration at the time of its payment or upon the completion of the provision of the service, whichever is the earlier; the Minister of Finance may, by Order, with the approval of the Finance Committee of the Knesset, increase the amount referred to in this paragraph;
(1b)(Repealed)
(2)the Minister of Finance may prescribe classes of transactions, including transactions as referred to in paragraphs (1) and (1a), in which the tax liability shall arise upon receipt of the consideration and in respect of the amount received, and may also prescribe when a payment not made in cash shall be regarded as having been made.

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