Will Avigdor Lieberman change the VAT import rules for purchases from abroad (from $75 to $300)?

Jim Mattis - 170307-D-GY869-147, Public Domain, 

Is Finance Minister, Avigdor Lieberman about to come out with dramatic news to the consumer public just before the elections? Lieberman instructed the Tax Authority to examine the increase of the VAT exemption ceiling for online shopping from websites abroad for personal imports, which currently stands at $75, to $300.

These are dramatic changes that will open up the online shopping market from international websites for private consumers much more widely than what exists today, and it is expected to increase online consumption. Today, buyers from websites abroad are required to pay 17% VAT on every purchase over $75 from international websites. 

In his instructions to the Director of the Tax Authority, Eran Yaakov, Lieberman asked to examine whether the move could be carried out differentially in certain industries where there are concentrated markets and excessive prices, and without harming the local industry. Among other things, the minister targets the toilet industry, where prices are high, and there is no local industry. The intention is to increase competition and lower prices in markets where excessive prices are charged today, due to the control of the major importers in the import of these products.

This is a move that does not require legislation and can apparently be carried out by the minister's signature on an order to raise the ceiling only, however, on election days, when the ministers are prevented from using their position in order to carry out an election campaign, this move is required to undergo a judicial review by the Legal Adviser to the Government, Attorney Gali Beharev -Miara.

The Finance Minister's office is examining the legal feasibility of the move, but estimates that the initiative, which is directed against the cost of living and does not require primary legislation, should not encounter opposition from the legal advisor to the government.

According to CPA Yigal Rufa, partner, manager of the tax department Fahan Kana, "The proposed exemption of the Minister of Finance, which refers to the import of products in the sectors to be determined, will of course increase the competition in those fields and is expected to result in a significant discount. Of course, the main challenge will be to determine which of the sectors will be protected under the aforementioned exemption, and how it will be possible to enforce this on a practical level, since the exemption will only be given to certain industries and not to all industries."

While the minister's office is talking about a move that should ease the cost of living and a good answer for all private consumers who are now forced to limit their online shopping in light of the exemption ceiling, or split up shopping - there are those who claim that this is a classic move of "election economy," and that Lieberman is trying to buy the hearts of consumers - The voters.

We will recall that only about a year ago, in June 2021, a proposal was presented to the Minister of Finance to completely cancel the exemption from VAT on online shopping from international websites . The proposal was put forward by the director of the Tax Authority, Eran Yaakov, as part of the discussions for the formulation of the 2021-2022 budget and the Law of Arrangements, but It did not mature into a bill and did not enter the drafts of the Settlements Law. 

"Harm to local small businesses" 

Attorney Tali Yaron-Elder, former Income Tax Commissioner, says that "the purchase tax exemption is not justified. The desire to lower the cost of living has resulted in a proposal here that will cause significant damage to local small businesses. They will have to exist in an unfair market, where they are taxed, while their competitors abroad are exempt from it.

"To lower the cost of living, there are a variety of other taxation tools that can be used, and which do not harm small businesses, such as horizontal tax reduction through credit points or a reduction in excise taxes.

"The small businesses are important to the economy, and it is not on them that the burden of the cost of living should fall. Even in the world, the direction is to cancel such exemptions - and not to increase them." 

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