Israel Tax Highlights - 2017 

Treaty|Tax Rate|Dividends|corporate tax

Israeli tax law is changing frequently, and there were several amendments to the Israeli Tax Code, including the reduction of tax rates. The following summarizes Israeli tax rates and other tax information for 2017.

For past years, see: Israel Tax Highlights 

Income Brackets

There are some changes to the personal, earned income tax bands and rates. Specifically, the 21% rate has been reduced to 20%, and the 48% rate has been reduced to 47%. The 34% rate has been raised to 35%.

Surtax

The surtax rules have been reformed. Surtax is relevant for anyone with total taxable income, arising from all sources worldwide, over a certain limit. The limit is being reduced from over NIS 800,000 per year to NIS 640,000. The tax rate on this income has increased from 2% to 3%.

Corporate Tax

Corporation tax has been reduced to 24% — it was 25% for 2016. It is aimed to be reduced further – to 23% — in 2018.

Property Tax

The "3 property tax" has been approved recently, applying to individuals who own at least 2.5 residential properties. Two properties of the taxpayer’s choice will be exempt. The tax is 1% of each property value, capped at NIS 18,000 per year, on the non-exempt properties.

Other Tax Changes

There are amendments to the taxation of kibbutzim and their members.

Israeli Tax on Shares and Option Plans

Under Section 102 of the Income Tax Ordinance, it is possible to reduce Israeli Tax on Shares and Option Plans, and likewise defer the tax until cash is realized if various conditions are met. There are two routes of Israeli Tax on Shares and Option Plans, the salary and the capital gains routes. The following link - Israeli Tax on Shares and Option Plans contains a summary of some recent tax rulings on Israeli Tax on Shares and Option Plans.

Dr. Avi Nov Law Offices, Israeli & international tax law 
*This article is intended for informative purposes only and is in no way to be construed as tax advice or a legal opinion

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