Israel has a general corporate income tax rate of 23%, which also applies to capital gains. Taxpayers must prepay taxes monthly before the 15th of each month. The remaining balance must be paid within the first month after the end of the tax year to avoid interest and linkage differences. The tax return is due within five months after the end of the tax year. Non-resident withholding taxes are not specified. The general value-added tax rate is 18%. The Composite Effective Average Tax Rate is 21.47% and the Composite Effective Marginal Tax Rate is 16.63%.
Israel Tax Brief
Time of Update 4/04/2026
Israel Corporate Income Tax (CIT)
General CIT Rate:
23
CIT Return Due Date:
Within five months after the end of the tax year.
CIT Payment Due Date:
If the remaining balance is paid before the end of the first month after the end of the tax year, the taxpayer should be completely exempt from any interest and linkage differences.
CIT Estimated Payment Due Date:
Taxpayers must prepay their taxes on a monthly basis before the 15th of each month. According to a fixed percentage of the company's turnover, there are 12 months of prepayments, or based on the previous year's tax assessment, there are 10 months of payments starting from the second month of the company's tax year.
Israel Withholding Tax (WHT)
Resident Withholding Tax (Dividend/Interest/Royalty):
25/25/25
None-Resident Withholding Tax (Dividend/Interest/Royalty):
25/0-25/25
Israel Value-Added Tax (VAT)
General VAT Rate:
18
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Israel Capital Gain Tax (CGT)
General Capital Gain Tax Rate:
Capital gains are constrained by the normal corporate income tax rate.
Israel Effective Tax Rate (ETR)
Composite Effective Average Tax Rate:
21.47%
Composite Effective Marginal Tax Rate:
16.63%
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TKEG Expat ™ Israel Corporate Tax Guide
1.
Israel Value-added tax (VAT)
The standard rate of VAT is 18%.
Exports of goods and certain services and various other transactions are zero-rated, and certain transactions are exempt.
Banks and other financial institutions pay VAT-equivalent taxes at the rate of 18% based on their total payroll and on profits.
Not-for-profit organisations pay VAT-equivalent tax (wage tax) at the rate of 7.5% of their total payroll.
Exports of goods and certain services and various other transactions are zero-rated, and certain transactions are exempt.
Banks and other financial institutions pay VAT-equivalent taxes at the rate of 18% based on their total payroll and on profits.
Not-for-profit organisations pay VAT-equivalent tax (wage tax) at the rate of 7.5% of their total payroll.
2.
Local income taxes
Israel does not impose district or local taxes on corporate income.
3.
Israel Corporate Income Tax (CIT)
Israel-incorporated companies and foreign companies that have a branch presence in Israel are both subject to Israeli corporate tax. An Israeli-resident entity is subject to Israeli corporate tax on worldwide income while a non-resident entity is subject to Israeli corporate tax only on income accrued or derived in Israel. Income sourcing rules determine when income is to be considered from an Israeli source.
The corporate tax rate is 23%.
The corporate tax rate is 23%.
4.
Transfer Tax
The purchaser of real estate is generally subject to acquisition tax at rates up to a maximum of 10% (the highest rate applies when the purchase price exceeds 21,239,160 ILS).
5.
Employer’s national insurance contributions
Employers are obligated to pay national insurance contributions based on a percentage of each employee’s income on a monthly basis. Employers are responsible for withholding employees’ contributions from wages and remitting these together with the employer’s own contributions. The employer’s contribution rates (current as of January 2024) for Israeli-resident employees are 3.55%, up to monthly income of ILS 7,522, and 7.6% on the difference between ILS 7,522 and the maximum monthly income of ILS 49,030.
For non-resident employees, the employer rates are significantly lower and are 0.59%, up to monthly income of ILS 7,522, and 2.65% on the difference between ILS 7,522 and the maximum monthly income of ILS 49,030. The minimal national insurance payments for non-resident employees do not provide any retirement benefit for the non-resident but generally provides a certain element of work accident coverage
For non-resident employees, the employer rates are significantly lower and are 0.59%, up to monthly income of ILS 7,522, and 2.65% on the difference between ILS 7,522 and the maximum monthly income of ILS 49,030. The minimal national insurance payments for non-resident employees do not provide any retirement benefit for the non-resident but generally provides a certain element of work accident coverage
