Israel VAT (Ma'am — מע"מ) Skill v2.0

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Section 1 — Quick reference

Field	Value
Country	Israel (מדינת ישראל)
Tax	Ma'am (מס ערך מוסף — Value Added Tax)
Currency	ILS (Israeli New Shekel — ₪)
Standard rate	17% (effective January 2025; was 17% restored after temporary 18% in 2024)
Reduced rate	0% (exports, specific agricultural produce, tourism services to non-residents)
Exempt	Financial services, insurance, residential rent (if not commercial), medical services
Registration threshold	ILS 120,000 annual turnover (2025 threshold); below this — "Osek Patur" (exempt dealer)
Small business	Osek Murshe (עוסק מורשה) — registered dealer filing periodic returns
Tax authority	Israel Tax Authority (ITA — רשות המיסים בישראל)
Filing portal	Shaam Online — https://www.misim.gov.il
Return form	Doch Ma'am (דוח מע"מ — Form PCN83 / PCN874)
Filing frequency	Bimonthly (most businesses); Monthly (turnover > ILS 1.5M)
Deadline	15th of the month following the reporting period
Tax invoices	Heshbonit Mase (חשבונית מס) required for all B2B transactions above ILS 305
Contributor	Open Accountants Community
Validated by	Pending — requires sign-off by Israel-licensed CPA (רואה חשבון)
Skill version	2.0

Key return form fields

Field	Meaning
Iska (עסקה)	Output tax base — taxable supplies at 17%
Yetsia (יציאה)	Exports / zero-rated supplies
Pator (פטור)	Exempt supplies
Totchaot (תשומות)	Input tax on purchases
Maam Letashlum (מע"מ לתשלום)	Net Ma'am payable (Output − Input)
Yiteret Totchaot (יתרת תשומות)	Excess input tax carried forward
Mechira LeZar (מכירה לזר)	Sale to foreign resident (zero-rated tourism)

Conservative defaults

Ambiguity	Default
Unknown rate on a sale	17% standard
Unknown whether export documentation complete	Treat as domestic 17%
Unknown business-use % (vehicle, phone, home)	0% input credit
Unknown whether Heshbonit Mase issued	No input credit until confirmed
Financial service vs professional service	Treat as professional — 17%
Residential rent vs commercial	Treat as exempt until lease reviewed
Foreign digital service (B2B)	Buyer self-assesses under reverse charge

Red flag thresholds

Threshold	Value
HIGH single transaction	ILS 100,000
HIGH tax delta on single conservative default	ILS 17,000
MEDIUM counterparty concentration	>40% of output or input
MEDIUM conservative default count	>4 per return
LOW absolute net Ma'am position	ILS 250,000

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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

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Section 3 — Supplier pattern library

3.1 Banking and financial services

Supplier	Typical description	Ma'am rate	Input credit
Bank Hapoalim (בנק הפועלים)	Bank fees, wire charges	Exempt	No
Bank Leumi (בנק לאומי)	Account maintenance, loans	Exempt	No
Mizrahi Tefahot (מזרחי טפחות)	Mortgage, business banking	Exempt	No
Discount Bank (בנק דיסקונט)	Commercial banking fees	Exempt	No
Bank Otsar HaHayal (אוצר החייל)	Military banking	Exempt	No
Bit (ביט — Hapoalim app)	P2P payment transfer	Exempt	No
PayBox (פייבוקס — Leumi)	P2P digital wallet	Exempt	No
Pelecard / Creditguard	Payment processing	17%	Yes
Tranzila	E-commerce payment gateway	17%	Yes

3.2 Electricity and utilities

Supplier	Typical description	Ma'am rate	Input credit
Israel Electric Corporation (חברת החשמל — IEC)	Electricity	17%	Yes (business)
Mekorot (מקורות)	Water supply wholesale	17%	Yes
Local municipality water (ועדה מקומית)	Water — municipal	17%	Yes
Paz Gas / Supergas	Gas — cooking/heating	17%	Yes
Cellcom Energy	Green electricity supply	17%	Yes

3.3 Telecommunications

Supplier	Typical description	Ma'am rate	Input credit
Cellcom (סלקום)	Mobile, broadband	17%	Yes (business use)
Partner Communications (פרטנר)	Mobile, fiber, TV	17%	Yes (business use)
Bezeq (בזק)	Fixed line, DSL internet	17%	Yes (business use)
HOT (הוט)	Cable TV, internet, phone	17%	Yes (business use)
012 Mobile / 013 Netvision	MVNO, internet	17%	Yes
Golan Telecom (גולן טלקום)	Discount mobile	17%	Yes

3.4 Transport and travel

Supplier	Typical description	Ma'am rate	Input credit
El Al (אל על)	Domestic flights (Eilat)	17%	Yes
El Al	International flights	0%	No input credit applicable
Arkia	Domestic flights	17%	Yes
Israir	Domestic flights	17%	Yes
Israel Railways (רכבת ישראל)	Train tickets	17%	Yes
Egged (אגד)	Bus — intercity	17%	Yes
Dan (דן)	Bus — Tel Aviv metro	17%	Yes
Gett (גט)	Taxi app	17%	Yes (business use)
Yango	Ride-hailing	17%	Yes (business use)

3.5 Logistics and postal

Supplier	Typical description	Ma'am rate	Input credit
Israel Post (דואר ישראל)	Domestic mail, parcels	17%	Yes
DHL Israel	International courier	0% (export) / 17% (domestic)	Yes
UPS Israel	International courier	0% / 17%	Yes
FedEx Israel	International courier	0% / 17%	Yes
Ashot Logistics	Domestic delivery	17%	Yes

3.6 Retail and office supplies

Supplier	Typical description	Ma'am rate	Input credit
Shufersal (שופרסל)	Supermarket — food/non-food	17% (food not zero-rated in IL)	Yes (business)
Rami Levy (רמי לוי)	Discount supermarket	17%	Yes
Office Depot Israel	Office supplies	17%	Yes
KSP (כ.ס.פ)	Electronics	17%	Yes
SuperPharm	Pharmacy — medicines	17% (medicines not zero-rated in IL)	Yes
Factory 54 / Castro	Clothing	17%	Yes

3.7 Software and digital services

Supplier	Typical description	Ma'am rate	Input credit
Priority Software (פריוריטי)	Israeli ERP	17%	Yes
Greeninvoice (חשבונית ירוקה)	Cloud invoicing platform	17%	Yes
Hashavshevet (חשבשבת)	Accounting software	17%	Yes
iCount	Cloud accounting	17%	Yes
Microsoft Israel (Azure, M365)	Cloud services — B2B	17% (buyer reverse-charge)	Yes
Google Workspace IL	Cloud — B2B	17% (buyer reverse-charge)	Yes
Salesforce Israel	CRM — B2B	17% (buyer reverse-charge)	Yes
AWS Israel	Cloud infrastructure — B2B	17% (buyer reverse-charge)	Yes

3.8 Professional services

Supplier	Typical description	Ma'am rate	Input credit
Roeh Heshbon (רואה חשבון — CPA)	Accounting, audit	17%	Yes
Orech Din (עורך דין — lawyer)	Legal services	17%	Yes
Munahel Ishur (מנהל אישור — notary equivalent)	Document certification	17%	Yes
Reklam / marketing agency	Advertising, PR	17%	Yes
Building contractor (קבלן)	Construction services	17%	Yes

3.9 Insurance

Supplier	Typical description	Ma'am rate	Input credit
Harel Insurance (הראל)	Business insurance	Exempt	No
Menora Mivtachim (מנורה מבטחים)	Property, liability	Exempt	No
Clal Insurance (כלל ביטוח)	Vehicle, business	Exempt	No
AIG Israel	Professional indemnity	Exempt	No

3.10 Healthcare

Supplier	Typical description	Ma'am rate	Input credit
Clalit (כללית)	Health fund / Kupat Holim	Exempt	No
Maccabi (מכבי)	Health fund	Exempt	No
Meuhedet (מאוחדת)	Health fund	Exempt	No
Private clinic / specialist	Private medical	Exempt	No

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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

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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

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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

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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

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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

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Example 6 — Bimonthly return summary

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

Item	Net (ILS)	Ma'am (ILS)
Software sales (domestic)	800,000	136,000
Export (zero-rated)	300,000	0
Total Output	1,100,000	136,000
Purchases — hardware	200,000	34,000
Office rent	50,000	8,500
Cloud subscriptions (reverse-charge)	30,000	5,100
Total Input	280,000	47,600
Net Ma'am payable		88,400

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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

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

Item	Why unknowable	What to ask
Vehicle purchase	Private (blocked credit) vs commercial (allowed) depends on registration	"Provide vehicle licence — is it רכב פרטי or רכב מסחרי?"
Home office	Business % of home use unknown	"What % of your home is used exclusively for business?"
Mobile phone	Business vs personal split	"Is this a dedicated business phone? Estimate business use %."
Entertainment	Must prove business purpose	"List attendees and business purpose of each entertainment expense."
Mixed residential/commercial property	Residential rent exempt, commercial 17%	"Is the lease for residential or commercial use? Provide lease agreement."
Export documentation incomplete	Zero-rate only with valid export evidence	"Provide customs export declaration or foreign payment evidence."
Osek Patur supplier	Unregistered supplier — no Heshbonit Mase available, no input credit	"Confirm supplier registration status — Osek Murshe or Osek Patur?"

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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

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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

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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

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Section 10 — Reference material

Resource	Reference
ITA filing portal (Shaam Online)	https://www.misim.gov.il
Ma'am Law (מס ערך מוסף, 1975)	ITA website — tax law library
ITA official guidance (חוזרים)	taxes.gov.il/maam
Registration threshold updates	ITA annual circular
Heshbonit Mase requirements	Section 9 Ma'am Law
Tourist refund scheme	ITA Form 1345 guidance

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Disclaimer

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