Israel Mulls VAT, Corporate Tax Cut

by Ulrika Lomas, Tax-News.com, Brussels

03 September 2015

Israeli Finance Minister Moshe Kahlon has revealed that he is considering tax cuts in order to boost the lackluster economy.

Kahlon told a conference of the Israel Lands Authority on September 3 that he is thinking about the merits of a 1 percent cut in value-added tax and a 1.5 percent reduction in corporate tax. Currently, the standard rate of VAT in Israel is 18 percent, and the corporate income tax is set at 26.5 percent.

Kahlon said that the measures could help to stimulate Israel's economy. Economic growth is now expected to undershoot the previous forecast of three percent, with a preliminary estimate indicating that second quarter growth slumped to 0.3 percent.

However, the Government must balance economy-boosting tax cuts against the need to raise revenue and achieve the Government's budget deficit target of 2.9 percent of gross domestic product for 2015/16.

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