General Information - Iasrael Taxes Authority
The Israel Taxes Authority (ITA) was established following a Government decision on September 15, 2003 to merge the Department of Income Tax and Land Taxation, the Department of Customs and VAT and the Automated Processing Service, with a view to "consolidating the management of tax collection under one main administrator, to be invested with legal authority to implement the relevant tax laws." The merger took effect on September 1, 2004.
Since March 2018, Eran Yaacov has been Director of the Israel Taxes Authority.
The establishment of the ITA was an important move towards increasing the efficiency of the tax system, improving the service to the public and contributing to law enforcement in Israel. The authority, which numbers 5,700 employees, consists of the following units:
1. The management, which deals with administrative matters and includes the Director, his
deputies and the professional departments.
2. The field offices:
• Income tax and real estate taxation – 26 regional assessment offices, 10 regional land tax
offices, 4 regional investigation units, a national intelligence unit, and one national and 3
regional collection enforcement units.
• Customs and VAT – 8 customs houses, 9 international land border crossings, 8 internal
crossings (along the Green Line), 3 overseas offices, 18 regional VAT stations (including 3
regional purchase tax offices), VAT liaison to the Palestinian Authority, 4 regional
investigation units, a national intelligence unit, and a headquarters unit for the prevention of
drug smuggling and money laundering.
In the field of income tax and real estate taxation, the ITA is responsible for the collection of
direct taxes, real estate tax, extraordinary levies, payroll tax and revenue tax. The ITA
operates by virtue of laws, regulations and directives, chief among them the Income Tax
Ordinance, the Land Taxation (Appreciation and Purchase) Law, the Property Tax and
Compensation Fund Law, the investment incentive laws ("Encouragement Laws"), the Value
Added Tax (Payroll and Profit Tax) Law, the Administrative Offenses Law, the Taxes
(Collection) Ordinance, the Income Tax (Taxation under Inflationary Conditions) Law, and the
Income Tax (Inflationary Adjustments) Law, as well as various tax-related directives that are
included in other laws and regulations.
In the field of customs and VAT, the ITA is responsible for the collection of indirect taxes that are imposed on the consumption of goods and services. The taxes collected include VAT at a uniform rate on all transactions in the economy, customs duties on all imported goods, purchase tax on imports and domestic goods, and fuel excise on all types of fuel.
The ITA's primary function is to collect the following taxes:
1. Direct taxes – income tax, capital gains tax, real estate appreciation tax
Direct taxes are levied directly on the taxable income of individuals and companies generated
from regular economic activities and from one-time capital transactions. In general, income tax
is charged at a progressive rate on the earnings of individuals and at a fixed rate of 23%
on the earnings of companies. Capital gains tax and real estate appreciation tax are charged
on profits from capital transactions of individuals (usually at a rate of 25%) and companies (at
the same rate as the tax rate on their regular earnings).
2. Taxes on real estate transactions
Real estate purchase tax, set as a percentage of the value of the transaction, is payable by
the buyer, while the seller is required to pay appreciation tax on the profit accruing to him
from the sale of the real estate.
3. Indirect taxes – customs duties, purchase tax, VAT, fuel excise
• Customs duties are imposed only on imports of goods, at the rates specified in the
Customs and Purchase Tax Tariff. Changes (mainly reductions) in the customs rates apply
by virtue of trade agreements to which Israel is a party, including agreements with the EU,
the US, EFTA, Canada, Turkey and Mexico.
• Purchase tax is imposed both on imports and on domestic goods and applies mainly to
imports of vehicles, cigarettes, fuel, cell phones, alcohol.
Purchase tax is charged at the same rate on imported goods and domestic goods of the
same type. At the beginning of the 1990s a policy of gradual reduction in the purchase tax
rates was implemented in order to drive economic growth, and it remains in force to this day.
• Value-added tax (VAT) is levied on the price of domestic transactions, imports and ervices,
at a uniform rate as determined in an order of the Minister of Finance (17% as of the date
of this publication).
• Fuel excise is levied at a fixed amount on fuels such as gasoline, diesel, petroleum, gas,
coal and heavy fuel oil (mazut). The amount of the tax is adjusted every three months in the
official Israeli government gazette (Reshumot), based on the consumer price index.
4. Payroll and profit tax imposed on financial institutions and payroll tax imposed on
non-profit organizations –
These taxes are prescribed in the VAT Law, which also charges the ITA with their collection.
The imposition of VAT on the services provided by these entities is technically complicated,
and the legislature therefore opted for an economically equivalent alternative that is
calculated as a function of the entity's profits and the wages paid by it. These two parameters
serve as a basis for the calculation of income tax, which is why the ITA was made esponsible
for the collection of these taxes.
Additional Functions of the ITA
• Enforces the conditions for legality of imports and exports in order to prevent illegal activities in
such areas as standards, health, quality of the environment, intellectual property, drugs,
imports from countries with which Israel has no diplomatic relations and commercial fraud. In
recent years, due to international treaties and agreements that were signed, the ITA has
increased its activity in the fields of intellectual property and money laundering.
• Supervision of commercial imports to the territories of the Palestinian Authority through all
seaports, airports and land border crossings, including the performance of security checks.
• Expansion of international cooperation in customs matters – Simultaneously with the trend
towards reducing import tax rates, international cooperation in the sphere of customs has
expanded, including investigations, simplification of processes and procedures, linking of
information systems, accession to international treaties and signing of trade agreements.
• Payment of compensation for war and drought damage pursuant to the Property Tax and
Compensation Fund Law, 1961. Funding for the compensation fund originally came from
property tax, but beginning in the year 2000, with the cancellation of this tax, funding derives
from real estate purchase tax.
• Employment grant (negative income tax) – On December 18, 2007, the Law to Increase the
Rate of Participation in the Workforce and Reduce Social Gaps was enacted, including the
"Negative Income Tax Law." The purposes of this law are to provide an incentive to join the job
market, to increase the disposable income of workers at the lower end of the pay scale and to
reduce the economic gap between low and high income earners. Since its enactment the law
has been implemented gradually. Starting in 2011, workers nationwide who meet the defined
criteria are entitled to receive the grant. Starting in 2013, there has been an increase of 150%
in the employment grant for working mothers and for single-parent fathers supporting children
who live with them.
Organizational Structure of the ITA
1. ITA Deputy Director
a. Planning and Economics Division – Deals with planning, economics and policy and
analyzes all aspects of the tax system, integrating between the different types of taxes. It also
formulates alternatives to legislative reforms and is responsible for publicity: economic
briefings, professional guidelines, work plans of the ITA and measurement and evaluation of
the performance of the ITA's departments.
b. Compensation fund – Pays out compensation for direct and indirect damage resulting from
hostile actions, war and drought.
2. Assessment and Accounts Control Division –
In charge of three areas: income tax assessments for salaried employees, self-employed
individuals and companies; real estate tax assessments (appreciation tax and purchase tax
assessments), and auditing of VAT accounts. In addition, the division is responsible for the
enforcement of bookkeeping rules and handles the payment of compensation to war and
drought victims. The division has overall responsibility for the uniform application of the
assessment policy and for verifying the completeness and accuracy of reports received from
income tax, VAT and real estate taxation clients.
3. Intelligence and Investigations Division –
In charge of the enforcement of tax laws that are the ITA's responsibility and the handling of
cases of suspected criminal tax offenses. The division collects intelligence, gathers
uncovers offenses and submits the relevant material to the legal units. The division operates
with other enforcement authorities, such as the Israel Police, the Israel Securities Authority,
the Anti-Money Laundering Authority in the Ministry of Justice, etc.
4. Professional Affairs Division –
In charge of outlining policy on professional matters, including the initiation and handling of
bills and legislation amendments needed to adjust the tax laws to the changing economic
reality, the preparation of professional circulars, the establishment of work teams for dealing
with tax matters and participation in various professional committees. The division is also
responsible for ensuring the correct application of all tax laws and for providing professional
guidance to field workers. In addition, it handles public inquiries relating to pre-rulings and
international tax matters.
5. Administration Division – The division is responsible for human resources development
and for coordinating the ITA's activities vis-à-vis internal and external entities. The division
oversees the ITA's budget and the allocation of human, material and budget resources for
projects and activities carried out by the authority's units. The division also deals with
housekeeping, computing, training and work relations and integrates between these areas.
6. Legal Division –
Deals with civil and criminal matters. In the civil sphere, the division handles the planning and
formulation of bills and provides legal assistance to the state prosecution, to the
management units and to the field units. In the criminal sphere, it prepares and prosecutes
criminal VAT and customs cases involving substantive tax offenses as well as basic criminal
income tax, VAT and customs offenses.
7. Collection Enforcement Division –
In charge of setting policy for collection from self-employed individuals, companies and
salaried employees, deductions, real estate taxation and VAT collection. The division is also
responsible for setting debt management policy and for following up all the collection
enforcement processes. The division operates an enforcement system for the collection of
taxes relating to the ITA, and if necessary it also activates the collection enforcement units
and "Force 100" for dealing with tax dodgers.
8. Automated Processing Service –
Unit managing the ITA's entire IT system and responsible for the development of a
supportive computer system, computer and communication infrastructures, databases, etc.
9. Internal Control and Ombudsman Division –
Conducts internal audits in all the ITA's units, to verify compliance with the law and the
professional directives. The unit also investigates public complaints to ensure the compliance
of the authority's employees with ethical standards. The division is responsible for the
performance of systematic, independent and objective control and auditing procedures, for
the purpose of identifying defects and recommending ways to correct them. In addition, the
division is required to implement the recommendations included in the State Comptroller's
10. Customs Directorate –
Sets foreign trade policy, manages the foreign trade system, enforces the conditions for
legality of imports and exports, acts to prevent illegal activities (fraud, drugs, money
laundering, intellectual property) and supervises all commercial imports to the territories of
the Palestinian Authority, including security checks. In recent years, the work processes of
the Customs Directorate have been revolutionized, using advanced computing means that
make it possible to improve customer service while tightening supervision and enforcement
of import laws and the payment of lawful taxes.
11. Customer Service Division –
Responsible for maintaining an available, user-friendly and efficient interface with the
public, for the provision of information and for the reporting and payment of taxes, with
emphasis on the creation of a single ITA-client point of interface, single-touch response,
reduction of friction with "innocent" clients, improving the availability of ITA offices to the
client and collection-promoting service activities supporting increased collection. The
division is developing client-oriented work processes involving the identification and
elimination of service "bottlenecks." It is also working to implement efficient, quality work
norms and to improve online service availability.
12. Office of the Chief Accountant of the ITA –
Responsible for the ITA's budget performance, while maintaining budgetary control and
supervision, as well as for supplier payment and account services, financial management,
keeping regular accounting records and payment of salaries to the ITA's employees. The
Office of the Chief Accountant is also responsible for the submission of current and periodic
reports to the Accountant General, as well as for the preparation of the ITA's annual
13. Spokesperson and Public Relations Division –
Responsible for relaying information to the public on the ITA's policies and activities, via
communication media and other informational media. The division provides the public with
the information it needs in its dealings with the ITA, with regard to ascertaining its rights and
fulfilling its obligations. In addition, the division helps to strengthen the deterrence required
for the ITA to carry out its job – meeting the State's revenue target, while imparting to the
taxpayers a sense of fairness and equality. The division operates the ITA's website and
Facebook page as central interactive interfaces for activities between the surfer and the
The main legal references for the performance of the ITA's tasks, as described above, include:
• Income Tax Ordinance [New Version] 1961.
• Value-Added Tax Law, 1975.
• Land Taxation (Appreciation and Purchase) Law, 1963 (name of the law until January 1, 2000
– Land Appreciation Tax Law, 1963; name of the law until August 1, 2007 – Land Taxation
(Appreciation, Sale and Purchase) Law, 1963).
• Property Tax and Compensation Fund Law, 1961.
• Various investment incentive laws ("Encouragement Laws"): Encouragement of Capital
Investments Law, 1959; Encouragement of Capital Investments in Agriculture Law, 1980;
Encouragement of Industry (Taxes) Law, 1969.
• Inflation laws: Income Tax (Taxation under Inflationary Conditions) Law, 1982; Income Tax
(Inflationary Adjustments) Law, 1985.
• Administrative Offenses Law, 1985.
• Taxes (Collection) Ordinance.
• Customs Ordinance [New Version].
• Purchase Tax (Goods and Services) Law, 1952.
• Stamp Tax on Documents Law, 1961.
• Fuel Excise Law, 1958.
• Import and Export Ordinance [New Version], 1979.
• Customs Agents Law, 1964.
• Prohibition of Money Laundering Law, 2000.
• Law to Increase the Rate of Participation in the Workforce and Reduce Social Gaps, 2007.
State Revenues from Tax Collection
The ITA's revenues in 2017 totaled NIS 300.1 billion, compared to NIS 276.1 billion in 2016. Excluding legislation amendments and extraordinary events, tax revenues increased by 4%.
- Revenue from direct taxes - in 2017 totaled NIS 168.1 billion, compared to NIS 143.6 billion in 2016. Excluding legislation amendments and extraordinary events, direct tax revenues increased in 2017 by 8% compared to 2016, which is higher than the national economic growth rate of 3%.
- Revenue from indirect taxes - in 2017 totaled NIS 132 billion, compared with NIS 133 billion in 2016. Excluding legislative amendments, indirect tax revenues remained almost unchanged from last year.