Israel weighs broad tax reforms ahead of next government
Israel’s Finance Ministry is conducting a wide-ranging review of the country’s tax system as it prepares proposals that could be presented to the next government. The review is being led by Tax Authority Director Shai Aharonovich, Budget Division head Mehran Prozenfer, and Chief Economist Shmuel Abramzon.
Among the measures under consideration is an expansion of income tax brackets to ease the burden on middle- and upper-income earners, including a possible widening of the 31% bracket. The ministry is also examining changes to child tax credit points and a reduction in certain long-standing exemptions.
Officials are considering whether to impose VAT on imported digital services and revisit exemptions related to tourism, fruits and vegetables, and Eilat. The committee is also examining possible limits on the capital-gains exemption available through study funds, while the idea of introducing an inheritance or estate tax currently appears less likely to advance.
The review is also looking at how Israel’s tax system should adapt to structural economic changes, including AI. Finance Ministry officials are weighing ways to broaden the tax base beyond labor while maintaining Israel’s competitiveness, particularly in high-tech and entrepreneurship.
The proposals remain preliminary and could change substantially before being presented to the next government or advanced through the Knesset.
Read more in Calcalist.
