Following the new tax reforms introduced at the beginning of the year, the Bitouah Léoumi has decided to lower social security contributions in Israel for low-income earners.
So here's the Bituah Leoumi amount for 2017:
- Up to a monthly accounting profit of 5,804 shekels, the self-employed person will have to contribute 5,97% (instead of 9,83% previously).
- Above 5,804 shekels per month, the self-employed person must pay 17,83% for each additional shekel.
An example to help you understand
For example, a self-employed person earning 7,000 Nis a month will have to pay :
- In 2016: 773 shekels per month.
- In 2017: 559 shekels per month.
This represents a saving of 2,562 shekels a year.
This reform will be particularly significant for self-employed workers whose profits are close to the average wage in Israel. Obviously, as your profit increases, the impact of this change will diminish.
It's not El Dorado, but we feel that little by little the Israeli government is adopting a series of reforms to help the most disadvantaged.
Interestingly, this reduction in payroll taxes in Israel will be advantageous up to a profit of around 21,000 shekels. Beyond this amount, you'll pay more in 2017 than in 2016.
Beware, however, of the obligation for self-employed workers in Israel to make pension contributions.Read also: Is every self-employed person obliged to pay Bituah Leumi?
Your questions - Our advice :
- What happens if I earn less than my estimate at the beginning of the year? Will I have to make an adjustment?
- Can I change my profit estimate during the year?
- I'm self-employed but also an employee. How does the calculation work?