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Israel

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About

Israel

Capital
Official languages
Population 
Currency

ISO 4217

Jerusalem

Hebrew and Arabic

8,655,535 (as of 2019)

Israeli Shekel

ILS

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Economy

Israel has a strong and growing economy, with a GDP of $372.3 billion in 2019. This is a 4.2% increase from 2018, making it one of the fastest growing economies in the world. The country has a high level of economic freedom, ranking 16th out of 180 countries in the 2020 Index of Economic Freedom. Israel also has a low unemployment rate of 3.9%, and a high labor force participation rate of 63.7%. The country has a strong export sector, with exports totaling $62.2 billion in 2019. Israel is also a leader in innovation, with the highest number of startups per capita in the world. The country is also a leader in research and development, spending 4.3% of its GDP on R&D in 2019. All of these factors contribute to Israel's strong and growing economy.

Taxation

In Israel, both corporations and individuals are subject to income tax, value-added tax (VAT), and various other taxes and duties. Here is an overview of the tax system in Israel:


Corporate taxation:

- Corporate income tax is levied on the profits of companies at a standard rate of 23% for 2022 and 24% for 2023 and thereafter, with certain exceptions for specific industries.

- Dividend payments made by Israeli companies to shareholders are generally exempt from tax.

- Other taxes and duties that companies may be subject to include social security contributions, real estate tax, and customs duty.


Personal taxation:

- Individuals in Israel are subject to personal income tax on their worldwide income at progressive rates ranging from 10% to 50%, depending on their income level.

- Social security contributions are also deducted from employees' gross salaries under the National Insurance Institute (NII) scheme.

- Other taxes that individuals may be subject to include capital gains tax, real estate tax, and inheritance tax.


Tax payment process and calendar:

- Israeli taxpayers are required to file their tax returns annually by the end of April of the year following the tax year.

- The tax year in Israel is from January 1st to December 31st of the same year.

- Companies are required to pay corporate income tax in four instalments throughout the year, with the first instalment due by the 15th day of the fifth month of the tax year, the second instalment due by the 15th day of the eighth month, the third instalment due by the 15th day of the eleventh month, and the final instalment due by the end of the tax year.

- Individuals may be required to pay advance tax if their tax liability for the year exceeds a certain amount. Advance tax payments are made in three instalments throughout the year, with the first instalment due by the end of the fourth month of the tax year, the second instalment due by the end of the eighth month, and the final instalment due by the end of the twelfth month.

- Late tax payments are subject to penalties and interest charges.

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