Knesset cancels tax exemption for online orders up to $150

Online shoppers in Israel lose major tax discount after the Knesset votes to cancel ministerial order which raised the tax exemption from $75 to $150.

By David Rosenberg, World Israel News

The Knesset voted overnight to cancel a ministerial order which raised the exemption for Israel’s 18% Value Added Tax (VAT) on goods ordered online from $75 to $150 in a defeat for Prime Minister Benjamin Netanyahu.

Last December, Finance Minister Bezalel Smotrich signed an order doubling the exemption level as part of a broader effort to encourage competition and to combat the high cost of living.

The move was a boon for online shoppers, enabling them to buy a wider range of goods online without paying either import or VAT taxes.

However, the change drew sharp criticism from the Federation of Israeli Chambers of Commerce, which represents some 60,000 merchants and businesses.

Under pressure from the Federation and from large retailers, a number of coalition lawmakers, including Likud MKs, organized a campaign within the Knesset to revoke the ministerial order.

Likud MKs Eli Dallal, David Bitan, and Hanoch Milwidsky pushed to bring the order to the full Knesset for a vote, with the plenum voting 59 to 25 to restore the lower exemption.

The vote was delayed by roughly four hours as coalition MKs attempted to filibuster the vote, while Prime Minister Netanyahu pressured MKs to vote in favor of maintaining the higher exemption level.

Despite Netanyahu’s efforts, roughly a dozen coalition lawmakers joined with the Opposition in voting to strike down the expanded tax exemption, while a number of MKs were absent during the vote.

Smotrich blasted the coalition MKs who voted to repeal his order, accusing them of abandoning their principles in exchange “for a few votes in the election.”

The Finance Minister said that Netanyahu himself had pushed for the expanded tax exemption, adding that after the Knesset vote he plans to sign a new order restoring the $150 exemption threshold.