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Knesset Committee Approves Israeli VAT Breaks For Housing

by Ulrika Lomas,, Brussels

13 November 2014

Israel's parliamentary finance committee has approved a revised proposal to zero-rate sales of houses to certain first-time buyers.

The plans were included in a Budget trade-off between Israel's Prime Minister, Benjamin Netanyahu, and Finance Minister Yair Lapid earlier this year.

The Knesset Finance Committee passed the Bill to introduce the measure with ten votes in favor and six against.

The scope of the tax break has been tweaked, after sustained opposition from some lawmakers and the Central Bank chief.

Under the current Bill, which must be approved by Parliament before becoming law, zero-rated treatment will be provided to couples with at least one child and they must be over the age of 35. The property must be their first purchase in the past 25 years. New provisions have been added to deal with child joint custody cases, enabling eligibility where a child stays with the applicants for at least five days each fortnight. Other provisions have been added to benefit disabled or mentally handicapped persons.

There were also controversial conditions proposing that the tax relief should only be open to persons who have served in the army or who have completed National Service. This matter was not discussed at the heated Committee meeting, and there has been no announcement of the condition's repeal, despite lobbying from human rights organizations that the provision will exclude certain minority groups.

Opposition lawmakers claim that the Bill has been changed substantially since the last reading of the legislation in the Knesset and has called for the Bill to be returned for debate in Parliament. However, the Government intends to table the Bill, as amended three times, shortly in the Knesset at a plenary session for adoption, a date for which has not been announced.

The measure would be effective for seven years following the legislation's enactment.

TAGS: Finance | VAT rates | tax | value added tax (VAT) | law | Israel | legislation | trade | services | VAT goods & services classification

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