The following section is written for your general edification. The tax situation for each type of entity will vary dramatically based on factors including: industry, business activities, eligible exemptions, etc. In all cases, you are advised to seek professional tax and auditing services for a comprehensive overview of your individual situation.

General Tax Information

Businesses in Israel are generally required to file audited annual tax returns within five months of the fiscal year. Israeli companies must pay taxes on worldwide activity, while foreign companies pay only on business conducted in Israel.

The corporate tax rate is 25% in Israel, although reduced rates are available for special types of business entities. A comprehensive list of tax incentives and credits for companies can be found here.

Taxes are paid in monthly installments, or bi-monthly installments for some small enterprises. In total, a company’s typical tax burden may include:

• Company tax installments - percentage of monthly sales revenue
• Supplementary company tax installments
• Tax withheld from salaries and remittances to suppliers
• VAT
• National insurance

For more information on filing taxes, please consult a tax attorney or accountant, the Israel Tax Authority, or refer to this guide from the Ministry of Foreign Affairs.

Cryptocurrency-Related Tax Information

Cryptocurrency is taxed as property, not currency. It will be taxed at the capital gains rate of 25% for private investors and 47% for businesses. The Israel Tax Authority has also indicated that it plans to tax Initial Coin Offerings (“ICOs”) in the near future.

Not-for-Profit Deductions and Exemptions

Income of nonprofit organizations (“NPOs”) that fit the definition of a “public institution” is exempt from taxation except in the case of income categorized as business income. For instance, income that is classified as income derived from a business, dividends, or interest is not tax-free.

To qualify, NPOs should:

• Have at least seven members
• Majority of members may not be related to each other
• Have a public aim
• Use its resources primarily to achieve the stated public aim
• Provide annual reports and satisfy other reporting/compliance requirements

NPOs may also be qualified for exemption from property taxes and VAT taxes. However, NPOs may not claim reimbursement for VAT tax paid for goods and services.

Exemptions and Deductions for Giving Donations

Donors may claim tax deductions for donations that satisfy the following conditions:

• The recipient NPO qualifies as a “public institution” and has been approved by the Minister of Finance as such.
• The Finance Committee of the Knesset has seconded the Minister’s approval.
• Donors may claim a 35% deduction on donations. However, other limits or restrictions may apply.

Sources

• Council on Foundations

  Israel

• Thomson Reuters

  Charitable organisations in Israel: overview

• PKF International

  Israel Tax Guide 2016-2017

• Coin Telegraph

  Israel confirms cryptocurrency will be taxed as property, not currency

• Jerusalem Post

  Israel authorities plan to tax ICOs and digital currencies