Good News: The Ceiling on Customs Exemptions for Personal Imports is About to Double
The present import limit for consumers will increase from $500 to $1,000
Back to list
The Knesset's Reform Committee, headed by MK Rachel Azaria, had decided to up the limits on personal imports for the consumer. To become law, the reform requires the Knesset’s approval for its second and third readings.
Every citizen will be able to order by Internet, whether in Israel or from abroad, personal imports that altogether cost up to $1,000 instead of the $500 limit permitted now. They will only have to pay the VAT rate.
Raising the level of tax exemption on personal imports is a sensitive issue because of the wider effect it has on the Israeli economy and the enormous sums of money involved. In the past five years there has been a 20% annual increase in Israeli spending on online shopping, which has continued unabated this year. According to data from the PayPal Internet payment company, in 2016 Israelis spent NIS 11.8 billion on online shopping, and this year (2017) they are expected to spend NIS 14 billion — an increase of 18%.
During the committee discussion, data about personal imports in Israel was presented showing it to be approximately 2.9 billion Israeli shekels annually. Not less than 3.7 million buyers purchase items this way, and the market is growing at an amazing 22% rate per year.
Retailers and shopping mall owners claim that ordering products on the Internet has harmed their sales and generated inequality in sharing the tax burden. They are warning that raising the exemption will damage their businesses — to the point where shops will be shut down and tens of thousands of workers will be fired.
The ceiling on the existing VAT exemption on personal imports remains at $75, as has been the case since 2012 when Finance Minister Yuval Steinitz signed orders that raised the exemption ceiling from $50 to $75 dollars.
The Tax Authority will operate a service by which each citizen will be able to calculate in advance how much VAT and other taxes he will have to pay for importing a product.
The recent reform mainly involves the number of items that can be imported: purchases from abroad and from the Internet of maximum 30 items of the same product for up to $1,000, or purchases of up to five expensive products, such as computers and smartphones, which cost more than $1,000, that will be charged tax accordingly. Until now, they could not be imported personally.
Another important clause approved yesterday is the import of car parts which the Ministry of Transportation had objected to. Until now, the import of a large number of products was allowed only to commercial importers and now, following the reform, it will also be permitted to private individuals. Personal import products will be divided into three levels: Level A - Without regulation, Level B - Import that requires a declaration, and Level C - Requires a manual inspection of documents.
Committee chairman, MK Rachel Azaria, said during the discussion: "Those who have money travel abroad and enjoy the low prices. For those who can not afford to travel abroad, we want to allow them personal imports. People buy online because they are looking for a product at a lower price and do not have time to go to the stores. This is the first time that we are allowing products to automatically enter Israel for personal and family use. The information will be be available to the public and everyone will be able to calculate the final price for the products and the approvals they require."
Israeli Shortcut chairman Mr. Zev Zer comments that the new regulations are especially important for foreigners living in Israel, who typically get many “care” packages from abroad and prefer using products from abroad that they are used to. They will find the new personal import regulations especially helpful