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Guide to VAT (Value Added Tax) Refunds and Exemptions for Foreigners Entering Israel

For the benefit of web surfers, we prepared a detailed easy guide about how foreign citizens entering Israel can receive VAT refunds and exemptions. This guide only applies to tourists with one of the visas mentioned below. 
 
For the goal of encouraging tourism in Israel, a tourist who purchased products during his visit to Israel is entitled to get a refund of the VAT he paid. He also receives a VAT exemption when he pays for a hotel or rents a car during his stay in Israel.
 

What is VAT?
 
VAT (value-added tax) is a tax that every Israeli consumer pays. VAT is included in the price of every product and service, and it is a uniform percentage of every purchase/sale. It is a source of income for the state. As of January 1, 2016, the VAT rate in Israel is 17%.
 
Who is considered a tourist?
 
A tourist who is eligible for a VAT refund is a tourist who is: 
* in transit (up to 5 days) or came for a visit (up to 90 days) in Israel.
* received a B2, B3 or B4 tourist entry visa (or is in possession of Form 17 "Entry/Exit Registration" or a tourist declaration form) or entered through a special order or permit (diplomats, representatives of foreign countries, etc.) 
* and is not an Israeli citizen.
An Israeli with dual citizenship (Israeli and foreign) even if he is not living in Israel for many years, is not entitled to this benefit because he does not qualify for a B2, B3 or B4 visa on his visit to Israel. The only exception is a minor born abroad to Israeli parents until he turns 18 years old.
 
Conditions for a tourist to get a VAT refund
 
•   He must have spent a minimum 400 Israeli new shekels including VAT on goods in Israel.
 The purchase was made at a shop authorized by the Israel Tax Authority and the Ministry of Tourism as a business included in the VAT refund arrangement. (The buyer has to make sure the business was approved for the VAT refund arrangement.) When buying a product, the tourist must make sure that the details of the product that he purchased and his information were correctly filled in in the tax invoice and the VAT refund document.
  He must take the goods that he purchased with him when leaving the country.
 The items that the tourist purchased were for his personal use only and were in non-commercial quantities as determined in the regulations.
 The VAT refund does not apply to the purchase of tobacco, food and beverage products, excluding alcohol purchased in wineries or in shops selling products to tourists approved for the VAT tax arrangement by the Ministry of Tourism.
 When the jewelry and valuables purchased are worth over 20,000 ₪ including VAT, the business must package the jewelry in the company’s original packaging. To get the VAT refund, the buyer may not open the bag until he shows the jewelry / valuables to the clerk for a VAT refund.
 
How to obtain a VAT refund
 
When you arrive at the airport, before undergoing the security check and checking in your luggage, you should first go to the Milgam VAT refund point in the third floor of the airport (Departures). To get your refund confirmation, you have to show them your passport, tax invoice, and VAT refund invoice that you received in the store where you bought the item. For a map of the Ben Gurion airport, click here.
Make sure that the tax invoice number and the VAT refund invoice should be between the date when you entered and departed Israel. You may be asked to show the items you purchased.
Once the VAT refund is approved and just before you leave Israel, you can get the VAT refund payment at the Milgam VAT refund point which is in the duty-free lounge after the border control.
A tourist can choose how he wants his refund paid: by cash, by crediting his credit card, or by bank transfer. If he chooses cash, he will get his refund immediately. If he chooses a different means, he will get his refund later. A tourist may also choose to receive the refund in a different currency (shekel, dollar or euro) minus the commission.The higher the VAT refund, the lower the commission for it. For the commission rates, click here.
Remember! To receive the VAT refund for jewelry, just before you leave the country you will have to show the jewelry againat the Milgam VAT refund point which is in the duty-free lounge after the border control.
Please note : Once you are already abroad, a request for a VAT refund will not be honored even if you have the VAT refund authorization form.
 
What is the VAT exemption (zero VAT) for tourists?
 
In order to encourage tourism in Israel, certain types of transactions carried out during your stay in Israel are given an immediate exemption from VAT charges, such as a rental car for your personal use, and hotel accommodations during your stay in Israel.
The exemption provided for a tourist staying in Israel, is only for a tourist who received a B2, B3 or B4 visa (as well as those entered Israel by special order or permit, such as diplomats, representatives of foreign countries, etc.).
 
These are the types of exemptions :
 
 A tourist who stays in a hotel, and uses services available at the hotel, including laundry service, use of sauna facilities, use of sports and health facilities, room services and related hotel services.
 One who rents a private motor vehicle to drive himself around.
 Domestic flights in Israel.
 Domestic Israeli cruises (including meals).
 Domestic tours by car / bus (including meals).
 Hospitalization in a hospital.


Contact information

Milgam company — VAT refund services for a tourist
Customer Service:
Phone: 03-7280123
Fax: 03-7280124
Mail: Vat.info@milgam.co.il
Questions and Answers:
Is a A / 1 student visa considered like a tourist concerning VAT refunds
Answer:
His status is not the same as a tourist’s concerning VAT.
Is a A / 4 companion visa considered like a tourist concerning VAT refunds
Answer:
His status is not the same as a tourist’s concerning VAT.
After handing over the luggage, can I ask for a VAT refund
Answer:
You must go to the VAT refund point at the airport to get the refund.
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