Israelis shopping online could soon find themselves paying Value Added Tax even for small purchases, if Finance Minister Avidgor Liberman’s plan to raise revenue is adopted.
Since taking office on June 13th, Liberman has warned that the government’s deficit has spiraled out of control over the past year, and has proposed a number of measures to both cut spending and increase revenue to state coffers.
One changed being proposed by the new Finance Minister is an end to the VAT exemption for small online purchases from abroad.
Hitherto, imported items purchased online were exempt not only from Israel’s import tax, but also from Israel’s 18% Value Added Tax, so long as the total value of the shipment does not exceed $75.
The exemption helped fuel a surge in recent years of online shopping with Israelis turning increasingly to online retailers like Amazon, Next, and Alibaba.
The Finance Ministry is expected to deliberate on the proposed end to the exemption later this week.
The exemption was first introduced in 2012, as part of the Netanyahu government’s effort to reduce the cost of living.
The move was both praised by free market economists and shoppers, and criticized by Israeli retailers who argued the exemption gives an unfair advantage to online stores.