Understanding the tax system for a company in Israel

tax system in israel Cabinet Expert Comptable Dray Dray

Mas Havarot - corporate income tax

Mas Havarot is the Israeli corporate tax that the company must pay on its profits for the fiscal year.

This tax is payable in monthly instalments. It is calculated according to your sales.

When the company's annual balance sheets are presented, the tax already paid will serve as a down payment on the final tax due, In this way, the company will be reimbursed the excess tax paid, or will have to top up the amounts already paid.

It is entirely possible to request a change in the percentage of instalments required by the tax authorities, or even to cancel instalment requests if you know that the company will be in deficit at the end of the tax year.

Important to know: The corporate tax rate is 23% (current for 2022).ALSO READ: Corporate tax in Israel

Dividend tax

Shareholders have several options for withdrawing their money:

  1. Take a salary from the company.
  2. Withdraw the money as a dividend.

For reasons of tax optimization, it is preferable to take a salary capped according to the various tax benefits available to shareholders, and to take the remaining profits in the form of dividends. Israel's tax system is a little different from France's in this respect.

Important to know: The tax rate for dividends is 25% or 30%, depending on your personal status.

Our firm will help you optimize your profits legally and pay as little tax as possible, whatever your tax status.

Maam - VAT Office in IsraelALSO READ: It's possible to be VAT-exempt in Israel!

Visit maam is the value added tax or VAT an indirect tax on consumption.

It is payable every 2 months for companies with annual sales of less than 1.5 million shekels (for 2021), and every month for companies exceeding this amount.

Important to know:

  1. At present, the Maam rate is 17% (current as of January 2021) on sales.
  2. Maam can only be deducted by those who are obliged to declare it (Hevra Baam, ossek mourché).
    • An ossek patour cannot recover the Maam because it does not declare it. The same applies to a non-profit association.
  3. Exports of goods and services are subject to a 0% rate on value added.
    • This means that you can reclaim the Maam on expenses incurred in Israel, but you don't pay the Maam on the income you have earned.
    • This is one of the main tax advantages of exporting to Israel.
  4. Maam fraud is subject to criminal lawThis can lead to prosecution and heavy fines.

As you can see, Israel's tax system is complex, so it's advisable to seek professional advice.



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