Israel Vat

Israel VAT (Ma'am — מע"מ) Skill v2.0

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

Section 1 — Quick reference

Key return form fields

Conservative defaults

Red flag thresholds

Section 2 — Required inputs and refusal catalogue

Required inputs

Before starting any Israel Ma'am work, obtain:

1. Osek number (מספר עוסק — 9-digit taxpayer ID) and registration certificate
2. Bimonthly bank statements in ILS (all business accounts)
3. Heshbonit Mase (tax invoices) from all suppliers — must include supplier's Osek number
4. Sales invoices issued (Heshbonit Mase or Heshbonit Kala for amounts below ILS 305)
5. Prior period Doch Ma'am (for carried-forward excess input credit)
6. Import documents from Customs (ASYCUDA / import declarations) for imported goods
7. Details of zero-rated tourism transactions (passports, foreign payment evidence)

Refusal catalogue

Refuse and escalate to a licensed CPA (רואה חשבון) for:

• Partial exemption (Alut Yechusit — עלות יחסית) — businesses with mixed exempt/taxable
• Real estate Ma'am transactions (Mas Rechisha — complex exemptions on property)
• Ma'am group registration (Kvutzat Osek — עוסק קבוצה)
• Designated area supplies (Eilat free zone — zero-rated)
• Diamond and precious metal special scheme
• Ma'am on long-term contracts and construction
• Retroactive registration for Osek Patur transitioning to Osek Murshe

Section 3 — Supplier pattern library

3.1 Banking and financial services

3.2 Electricity and utilities

3.3 Telecommunications

3.4 Transport and travel

3.5 Logistics and postal

3.6 Retail and office supplies

3.7 Software and digital services

3.8 Professional services

3.9 Insurance

3.10 Healthcare

Section 4 — Worked examples

Example 1 — Standard Ma'am on consulting fee

Scenario: Tel Aviv software consulting firm issues Heshbonit Mase to Israeli corporate client.

Bank statement line (Bank Hapoalim format):

תאריך    : 15/04/2025
סוג פעולה: זיכוי - העברה בנקאית
תיאור    : TECH SOLUTIONS LTD - חשבונית 041/2025 - שכ"ט ייעוץ
סכום     : +234,000 ₪

Working:

• Heshbonit Mase: net ILS 200,000 + Ma'am 17% ILS 34,000 = ILS 234,000
• Return entry: Output Iska — ILS 200,000 | Output Ma'am: ILS 34,000

Example 2 — Import of goods (reverse-charge customs)

Scenario: Company imports electronics from Germany — customs clears at Ben Gurion.

Bank statement line (Bank Leumi format):

תאריך    : 10/04/2025
פעולה    : שוברי רכש - פרעון / מכס ומע"מ
תיאור    : תשלום מכס ומע"מ יבוא — ASYCUDA REF 2025-04-1234
סכום     : -87,040 ₪

Working:

• Import customs document: CIF value ILS 400,000 + customs duty ILS 112,000 = ILS 512,000 × 17% = ILS 87,040 Ma'am
• Pay at port of entry — then claim as input tax in Doch Ma'am filing
• Return entry: Input Totchaot — ILS 512,000; Input Ma'am: ILS 87,040

Example 3 — Zero-rated tourism service

Scenario: Hotel provides accommodation to foreign tourist paying in USD.

Bank statement line (Mizrahi Tefahot format):

תאריך    : 18/04/2025
סוג      : זיכוי מטבע חוץ
תיאור    : HOTEL BOOKING - FOREIGN GUEST - BOOKING REF TL-2025-0418
סכום     : +7,650 ₪ (USD 2,100)

Working:

• Foreign tourist — payment in foreign currency — qualifies as zero-rated tourist service
• Requires: passport copy, foreign payment evidence, ITA Form 1345
• Return entry: Mechira LeZar — ILS 7,650 | Ma'am: ILS 0

Example 4 — Reverse-charge on foreign digital service

Scenario: Company pays for Google Workspace (billed from Google Ireland).

Bank statement line (Discount Bank format):

תאריך    : 05/04/2025
פעולה    : חיוב — שירות בנקאי חו"ל
תיאור    : GOOGLE IRELAND LTD — WORKSPACE SUBSCRIPTION APR 2025
סכום     : -5,865 ₪ (USD 1,600)

Working:

• Foreign digital service to Israeli business — treated as supplied in Israel
• Buyer self-assesses: ILS 5,865 × 17/117 = ILS 852 Ma'am (or ILS 5,013 net + ILS 852 Ma'am)
• Declare as output AND claim as input — net zero for fully taxable business
• Return entry: Reverse-charge output ILS 5,013 | and Input Totchaot ILS 5,013

Example 5 — Business vehicle purchase (blocked credit)

Scenario: Company purchases a passenger car (רכב פרטי) for a salesperson.

Bank statement line (Hapoalim format):

תאריך    : 03/04/2025
סוג פעולה: חיוב - העברה בנקאית
תיאור    : CHAMPION MOTORS LTD - רכישת רכב — חשב׳ 2025-V-041
סכום     : -175,500 ₪

Working:

• Passenger car (רכב פרטי): input Ma'am blocked under Section 41 of Ma'am Law
• Heshbonit Mase shows: net ILS 150,000 + Ma'am ILS 25,500 = ILS 175,500
• Input credit: ILS 0 — full block on private passenger vehicles
• Record as Tier 2 — confirm whether vehicle classified as commercial (רכב מסחרי) or private

Example 6 — Bimonthly return summary

Scenario: Tech startup — March–April 2025 bimonthly period.

Section 5 — Tier 1 rules (compressed)

Rate assignment:

• 17% standard: almost all goods and services (food, clothing, electronics, professional services — all at standard rate unlike EU VAT)
• 0%: exports of goods with customs declaration, services exported to foreign residents used outside Israel, tourism services to non-residents with foreign currency payment
• Exempt: financial services, insurance, residential rent (non-commercial), medical services by licensed practitioners, educational services

Input credit:

• Credit allowed on all 17% purchases for taxable business activities
• Blocked: passenger vehicles (רכב פרטי) — Section 41 Ma'am Law
• Blocked: personal expenses — entertainment with non-business purpose
• Partially blocked: vehicles used partly for business — 2/3 credit allowed if mixed use claimed; needs documentation
• Reverse-charge (foreign services): output and input net to zero for fully taxable Osek Murshe

Filing mechanics:

• File bimonthly via Shaam Online by 15th of following month
• Monthly if turnover > ILS 1.5M (file by 15th of following month)
• All B2B invoices above ILS 305 must be Heshbonit Mase with supplier's Osek number
• Excess input credit carried forward — refund available for exporters after 3 months
• New businesses: first 6 months allowed monthly filing to facilitate refunds

Section 6 — Tier 2 catalogue (genuinely data-unknowable items)

Section 7 — Excel working paper

Columns: Date | Supplier / Customer | Osek No. | Invoice No. | Net (ILS) | Ma'am Rate % | Ma'am (ILS) | In/Out | Zero-rated? | Exempt? | Tier 2 flag | Notes

Tab structure:

1. Output_Sales — all sales (domestic 17%, zero-rated exports, exempt)
2. Input_Purchases — all purchases with Ma'am credit
3. ReverseCharge_Foreign — foreign services self-assessed
4. MaamSummary — bimonthly return totals
5. Tier2_Items — awaiting client response

Key formula:

Net_Maam_Payable = Total_Output_Maam - Total_Input_Maam - Excess_BF

Section 8 — Bank statement reading guide

Bank Hapoalim format

תאריך    : 15/04/2025
סוג פעולה: זיכוי - העברה בנקאית
תיאור    : TECH SOLUTIONS - חשבונית 041/2025
סכום     : +234,000 ₪
יתרה     : 1,234,000 ₪

Fields: תאריך (date) | סוג פעולה (transaction type) | תיאור (description) | סכום (amount, ILS)

Bank Leumi format

15.04.2025  |  זיכוי  |  TECH SOLUTIONS  |  +234,000.00  |  יתרה: 1,234,000.00

Key patterns:

• ILS number format: Comma = thousands separator; period = decimal (ILS 234,000.00)
• זיכוי (credit): Money in — match to issued Heshbonit Mase
• חיוב (debit): Money out — match to received Heshbonit Mase for input credit
• מטבע חוץ (foreign currency): Foreign payment — check for zero-rated export or reverse-charge
• מכס ומע"מ: Customs and Ma'am — import duty + import Ma'am payment

Section 9 — Onboarding fallback

When client cannot provide Heshbonit Mase for all transactions:

1. Use bank statement amounts as Ma'am-inclusive totals and back-calculate:
   • Net = Total ÷ 1.17 | Ma'am = Total − Net
2. Apply conservative defaults: 17% output on all unverified sales; 0% input credit without valid Heshbonit Mase
3. Flag all items without Heshbonit Mase in Tier2_Items tab
4. Issue data request listing missing invoice references
5. Warn client: ITA can disallow input credit claims without valid Heshbonit Mase from Osek Murshe supplier — risk of penalty

Section 10 — Reference material

Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.

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