It has been an interesting week so far in Israel. It is always interesting to observe the relationship between taxes and business.
Despite having one of the strongest economies in the world, Israel plans to cancel the VAT exemptions that are currently applied to different services. This is due to the war and pressure from local businesses.
There is currently a VAT exemption for purchases made online up to $75; eliminating this benefit will bring 3 billion USD to the state coffers. Israel is also planning to eliminate the exemption for digital services and foreign tourists coming to Israel.
This week, Azrieli.com and Shufersal, two major marketplaces in Israel, announced that they would close their marketplaces due to the current situation and high logistics costs.
Shufersal decided to focus on its FMCG business and lead in this sector, and the reasons for closing these marketplaces go beyond logistics costs, even though they require very precise management.
Since living in Israel is expensive, and this VAT benefit was intended to reduce this cost, it will be interesting to see how Israeli customers behave in such a situation.
Also, it will be interesting to observe how the global online merchants that sell to Israeli customers will be affected by this change and how they will continue to maintain attractive prices.
Dikla Sharabi