Israel proposes VAT on foreign Internet services

Sat 4th Apr 2015

The Israeli tax authorities have issued proposals to subject digital advertising services to Israeli VAT at 17%. Currently, providers with no permanents establishment in Israel are. This will include services provided by Google, YouTube and Facebook

If passed, this will oblige foreign providers to register for Israeli VAT as a non-resident business. The generally requires the appointment of a local fiscal representative to manage the registration and ongoing returns.

In 2014, the Israeli High Court refused a petition to subject foreign companies providing Internet services to consumers to VAT.

In addition to VAT, there may be proposals to compel some of the digital multinationals to pay corporate income tax where they have local staff, but avoid a traditional permanent establish under current double taxation protocols.