Accounting and legal

Accounting and tax

    Israel accounting and tax obligations

  1. Corporate income tax in Israel is imposed at a standard rate of 26.5%. All companies must register for taxation with the Israeli Tax Authority and must file annual tax returns within 5 months following the end of the fiscal year;
  2. The standard Value Added Tax (VAT) rate in Israel is 18%. Companies conducting business activities in Israel must i) register for VAT and ii) file returns monthly if its annual sales are over US$400,000, or iii) every 2 months if below that threshold;
  3. A 25% capital gains tax is applicable on gains derived from Israeli sources by foreign entities. This rate can however be reduces or exempt under a tax treaty;
  4. Non-resident companies in Israel are exempt from capital gains tax on gains derived from i) sale of shares in a resident R&D Intensive Company ii) sale of securities in a resident company acquired on or after January 1st 2009;
  5. A standard 30% withholding tax is applicable on dividends paid to foreign entities. However a reduced rate of 25% is applicable to foreign companies holding less than 10% shares in their Israeli counterpart;
  6. Withholding tax is also applicable at the rate of i) 20% on dividends distributed by preferred enterprises ii) 15% on dividends distributed by approved enterprises;
  7. A standard 25% withholding tax is applicable on interests paid to non-resident companies. This tax maybe exempt on i) interests paid to nonresidents for bonds traded on the Israeli stock exchange by a resident company, or ii) where a double tax treaty is applicable;
  8. A 15% withholding tax is levied on royalties paid to non-resident companies. This rate is however subject to reduction where a tax treaty is applicable;
  9. The branch of a foreign company categorized under Israeli-approved enterprises is subject to a 15% withholding tax on remittances of profits abroad;
  10. Payroll tax in Israel is applicable at the rate of i) 18% on wages for financial corporations and ii) 7.5% on wages for non-profit organizations;
  11. Israeli companies may carry forward their business losses indefinitely, to be offset on subsequent business income and capital gains;
  12. Israel has concluded more than 50 double taxation treaties with different international jurisdictions including China, India, Singapore, the USA, the United Kingdom and Germany among others;
  13. Healy Consultants will assist the Client with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparing financial accounting records and iv) preparing forecasts, budgets and performing sensitivity analysis;
  14. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Frequently asked questions

Contact us

For additional information on our accounting and tax services in Israel, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Grace Odhiambo, directly:
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