In more than 90 countries

The consumer

Consumer Profile
There are around 8,914,885 people living in Israel. 74% are Jewish (of which Israel-born Sabras 78.7%; Europe/America/Oceania-born 14.8%; Africa-born 4.2%; Asia-born 2.3%), and 21.1% are Arabs (CIA). The density of population is 426 inhabitants/km² (World Bank). 92.8% of Israelis live in cities, with an average annual rate of urbanization of 1.51% in the last five years (CIA). The population is concentrated in and around Tel Aviv, as well as around the Sea of Galilee; the south remains sparsely populated with the exception of the shore of the Gulf of Aqaba. Israel's annual population growth rate stood at 1.44% in 2022 (CIA), almost three times faster than the OECD average of around 0.6% (World Bank, 2020). With an average of 2.56 children per woman (CIA), Israel also has the highest fertility rate in the OECD by a considerable margin and much higher than the OECD average of 1.6 (World Bank). The median age is 30.4 years old, people between 0 and 14 years are 26.8% of the population, people from 15 to 24 years are 15,7% of the population, people between 25 and 54 years are 37.2% of the population, people aged 55 to 64 years are 8,4% of the population and people over 65 are 12% of the population (CIA, latest data available).

In Israel, 88% of adults aged 25-64 have completed upper secondary education, higher than the OECD average of 79%. This is truer of women than men, as 87% of men have successfully completed high-school compared with 89% of women (OECD). 1% of the labour force work in agriculture, 17% in industry and 82% in services (World Bank, 2020). The average household size is 3.1 people, 21% of the household count one person, 28% count 4 or 5 people, and 11% more than 6 people (UN, latest data available).
Purchasing Power
The GDP per capita (PPP) of Israel is USD 39,489.3 (World Bank, 2020), a decrease from USD 40,004 the year before. According to data from the Central Bureau of Statistics, the average monthly salary in Israel in March 2022 was NIS 12,672, a 1.5% increase year-on-year. The average household net-adjusted disposable income per capita in Israel is lower than the OECD average of USD 30,490 a year.
Due to the Covid-19 pandemic, private expenditure decreased by 9.2% in
2020 (CBS). The Gini Index of Israel was of 38.6 in 2018 (World Bank, latest data available).
A report by the Organisation for Economic Cooperation and Development, titled “The Pursuit of Gender Equality: An Uphill Battle,” shows that Israeli women have a particularly steep hill to climb. According to OECD data, women working full-time jobs earned on average 22.7% less than their male peers in 2018, which is the second highest gap in the OECD.
Consumer Behaviour
Israelis are responsive to advertising and branding. Shopping is a popular pastime and Israelis are interested in purchasing quality items, even if that means paying a higher, albeit reasonable, price. After-sales services and warranties are also mandatory, as Israeli consumers consider warranties to be a guarantee of the quality of the product. Israeli consumers enjoy new products and the Israeli legislation promotes national products. Israeli consumers are also quite interested in online shopping. According to the Israel Internet Association, 75% of Israelis (95% of total Internet users) shop online, making them the most connected shoppers in the world. Furthermore, around 80% of online Israeli shoppers make purchases from foreign websites, according to a study conducted by PayPal and Ipsos. E-commerce sales grew by 24% in 2021, and is expected to grow by 11% annually during 2021-25 (ecommerceDB).

According to a Nielsen survey for SIAL, 20% of consumers are ready to pay more for innovative products, whereas a third declare themselves willing to reduce their shopping cart and 65% of them consider "health" to be the key consideration while shopping. The Covid-19 pandemic induced further changes including increased digitalisation, a cut in non-essential spendings and increased focus on health and wellbeing.
Collaborative platforms for transport such as Uber in Israel is not common. Instead, locals use mobile application called GetTaxi, which is connected to a licensed taxi or public transport.
Consumer Recourse to Credit

Israeli households live beyond their resources due to easy access to credit. It is common for Israelis to pay for their purchases with a credit card over several instalments or to give post-dated checks. Nevertheless, concerned about household insolvency, the Bank of Israel and several important banks took measures to limit the growth of consumer credit.

A report on the Israeli consumer's access
to credit published by researcher Kyrill Shraberman, in conjunction with the non-profit fiscal-responsibility group Pa’amonim, shows that: 35% of married couples and 39% of unmarried individuals between the age of 25 and 60 spend more than they earn each month. Singles between the ages of 50 and 60 also outspend their wages, more than any other demographic. Young apartment renters between the age of 25 and 29 also tend to outspend their entry-level salaries.

The average level of the consumer debt for 25- to 29-year-olds is ILS 150,000, compared to ILS 315,000 for the 50-60 years old. Only the households making mortgage payments tend to be luckier than the rest, as they do not face a similar negative gap between their earnings and spending levels. Lower-income married couples outspend their income by 23%, while unmarried poor people incur on their credit card 37% extra expenses more than their earnings.

Israel’s consumer lending industry recorded a positive growth in 2019, with significant increases registered in both outstanding balance and gross lending terms. However, the COVID-19 epidemic may make it hard for many households to service debt. Meanwhile, the Bank of Israel launched the country's first consumer credit database in 2019.

Growing Sectors

The fastest growth rates (averaging 8% annually in recent years) are to be found in the hi-tech sectors.
Bottled water, soft drinks and juices are among the growing sectors, as well as apparel and footwear.
According to Storenext, Israel's largest consumer market database, the fast-moving consumer goods (FMCG) segment is in its fourth year of sales stagnation.

Consumers Associations
Israel Consumer Council , Established by the Ministry of Industry and Trade in coordination with the Standards Institute.
Consumer Protection and Fair Trade Authority , The Consumer Protection and Fair Trade Authority is an independent, internal governmental authority, established by Consumer Protection Law, 5741-1981.


Importing & Distributing

Import Procedures
The Israel Customs Administration employees are in charge of enforcing the terms of legality of import and export, preventing illegal activity (frauds, narcotics, money laundering and intellectual property violations), and supervising all import to and export from Israel, as well as commercial import to the Palestinian Authority.

The following documents are required to import goods into Israel: invoice, packing list, delivery order (a document noting the freight’s physical location at the port of import), import declaration, importer's custom declaration (a form that needs to be completed by the importer and is meant for indicating the relations between the importer and the supplier for the purpose of calculating the total value of the deal concluded between them including all auxiliary costs), certificate of origin, freight bills (according to the means of transport), import permit issued by the Ministry of Economy and Industry, certificate of the Standards Institution of Israel stating that the product complies with Israeli standards.

Information on detailed customs clearance procedure is available on the website of the Israel Customs Administration.
Specific Import Procedures
There are special certificates for certain imported products on demand from the competent authority (Health Ministry, Transport Ministry, etc.).
The Kosher certificate is needed for food products such as beef, poultry, and other meat and products. However, in an effort to encourage food imports and lower prices on Israeli supermarket shelves, the Chief Rabbinate has decided to exempt importers from presenting a certificate of supervision from a recognized local kashrut agency as a condition for receiving a kosher stamp in the country.
Distribution channels
Consumer spending has been driving Israeli economic growth in recent years, but retailers in the country do not appear to have been the beneficiaries of booming private consumption. Due to the Covid-19 pandemic, private expenditure decreased by 9.2% in
2020 (CBS). According to the latest data available from the US Trade Department, the fast-moving consumer goods (FMCG) segment sales reached USD 15.08 billion in 2020, of which USD 12.41 billion were from food products. The Central Bureau of Statistics estimated that in 2020 expenditure for food, beverages and tobacco accounted for 20.8% of consumption expenditure. The retail food market faces slow growth, limited competition, and high prices. Changes have been noted in the shoppers’ basket: facing high food costs (19% higher than the OECD average), Israeli consumers are opting for more affordable products, with an increase in the sales of private label products. In addition, the introduction of the " Food Law ", Law for Enhancement of Competition in the Food Sector, is a major government regulation which imposes various restrictions on retailers in term of pricing, number of outlets in the same area, etc.

Although small grocery stores are the most important retail channel in the country in terms of numbers of stores, they struggle to compete with the supermarkets, due to more competitive prices and longer operating hours. There are three main retail food sub-sectors in Israel: supermarkets located on the outskirts of the main cities (however, supermarkets chains are increasing their activity and presence in the centre of cities and online), traditional markets with a limited range of products located in the neighbourhood and convenience stores located on the high streets or gas stations.
Distribution market players
Foodstuffs are distributed through supermarkets, traditional markets, convenience stores and open air markets. Sales in supermarket chains account for over 65% of total retail food market sales. The top ten chains have over 700 outlets. The three leading supermarket retailers are Shufersal, Rami and Levi Merav-Mazon Kol/Osher Add, which have more than half of the market share (USDA, 2021). Israel’s largest retail producer and seller of non-kosher products is Tiv Ta’am. Over the last decade discounters have seen considerable growth
Convenience stores count around 900 outlets, while small independent neighbourhood grocery stores dominate the market in terms of number of outlets with approximately 5,000 outlets (although the number is declining).
Retail Sector Organisations
Federation of Israeli Chamber of Commerce
Ministry of Economy and Industry


Operating a Business

Type of companies

Public limited company (business corporation)
Number of partners: Minimum 7 shareholders and 2 executives.
Capital (max/min): No minimum capital. Pour être coté à la bourse de Tel Aviv, minimum 25 millions NIS
Shareholders and liability: Liability limited to the amount of contributions in share capital.
Limited Liability Private Company (SARL)
Number of partners: Minimum 1 shareholder and 1 executive. Maximum 50.
Capital (max/min): No minimum capital.
Shareholders and liability: Liability limited to the amount of contributions in share capital.
General Partnership
Number of partners: Minimum 2 partners in the partnership.
Capital (max/min): No minimum capital.
Shareholders and liability: Unlimited liability for debts and obligations of the company.
Setting Up a Company Israel Middle East & North Africa
Procedures (number) 3.0 6.3
Time (days) 11.0 19.5

Source: Doing Business - Latest available data.


Cost of Labour

Minimum Wage
According to Government data, the minimum wage is ILS 5,300 per month as of 2022.
Average Wage
According to data from the Central Bureau of Statistics, the average wage in 2021 was ILS 11,795 per month. In March 2022, it reached ILS 12,672.
Social Contributions
Social Security Contributions Paid By Employers: Contributions paid by the employer amount to 3.55% (up to monthly income of ILS 6,331), and 7.6% on the difference between ILS 6,331 and the maximum monthly income of ILS 45,075.
Social Security Contributions Paid By Employees: Employee contributions are at standard rate, 7% for National insurance and 5% for medical insurance and at reduce rate, 0.4% for National insurance and 3.1% for medical insurance.

Intellectual Property

National Organisations
Israel Patent Office of the Ministry of Justice for patents and copyrights.
Regional Organisations
Israel is a signatory to the European Convention on the International Classification of Patents for Invention, the European Convention relating to the Formalities required for Patent Applications, as well as the Universal Copyrights convention and the Lisbon Agreement. Nonetheless, it is best if foreign patents are registered in Israel.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)


Tax Rates

Consumption Taxes

Nature of the Tax
VAT - (MA'AM in Hebrew)
Tax Rate
17% (the VAT rate is set to increase to 18% starting from January 1, 2025).
Reduced Tax Rate
Certain items are zero-rated, including exports of goods; supplies of intangibles to foreign residents; supplies of services to foreign residents, subject to broad use and enjoyment restrictions; hotel accommodation for tourists; leasing private cars to tourists;  tourist transportation; supply of monitor services, as well as inspection and coordination services, with regard to clinical trials conducted in Israel.
Not-for-profit organisations pay VAT-equivalent tax (payroll tax) at the rate of 7.5% of their total payroll. The rate is 17% for financial institutions (set to increase to 18% in 2025).
Other Consumption Taxes
Purchase tax on the purchase of real estate (0-10% for the first residential property owned in Israel; 8-10% if real estate is an additional residential home or 0.5-5% for Jewish making their "Aliyah"), municipal tax, land betterment tax (varies depending on purchase date).
Certain goods are subject to excise taxes (including gasoline and diesel fuel used for transportation, tobacco, and alcohol) at different rates.
Not-for-profit organisations pay VAT-equivalent tax (payroll tax) at the rate of 7.5% of their total payroll. The rate is 17% for financial institutions.
A luxury tax is levied on the purchase of certain yachts and luxury cars.
There are no stamp duties in Israel, nor net wealth tax or net worth tax.

Corporate Taxes

Company Tax
Tax Rate For Foreign Companies
Companies incorporated in Israel or managed and controlled in the country (determined on a case-by-case basis) are deemed to be resident in Israel.
A foreign corporation managed and controlled by a new Israeli resident or a senior returning resident (an individual who has spent at least 10 years abroad) is typically not classified as an Israeli resident company for 10 years from the individual's arrival in Israel. However, the Israeli Tax Authority (ITA) may still assert that the individual creates a permanent establishment (PE) of the foreign corporation in Israel.
Capital Gains Taxation
The capital gains tax rate varies based on the asset's purchase date and nature. For corporations, the standard rate is 23%. Profits accrued from January 1, 1994, have an exemption on the inflationary component; a 10% tax applies to profits accrued before this date.
On share sales, undistributed company profits during the seller's ownership period, subject to company-level tax, may be tax-exempt in certain cases.
Israeli resident entities face capital gains tax on asset disposal, irrespective of asset location. Israeli-source income includes gains from tangible and intangible assets in Israel or holding interests in Israeli assets. Shares of Israeli companies or foreign ones with main assets in Israel may also be treated as Israeli assets.
Non-Israeli tax residents are exempt from Israeli capital gains tax on Tel Aviv stock exchange share sales unless linked to an Israeli permanent establishment (PE).
Nonresidents enjoy a broad exemption from capital gains tax on securities in Israeli or related companies acquired after January 1, 2009, except for certain cases like shares primarily consisting of Israeli real estate assets or held through a PE.
Preferred technological enterprises selling qualifying intangible assets to related nonresidents may be taxed at 12% or 6% rates, subject to conditions.
Main Allowable Deductions and Tax Credits
Expenses incurred wholly and exclusively in the production of income are generally tax-deductible.
Generally, pension fund contributions made to recognised funds are deductible for the employer, provided they are not above a certain level and are made regularly. Interest expenses incurred in the production of taxable income are normally deductible. Provisions for bad debts are deductible in the year in which it is evident that the debt has become irrecoverable. Research and development (R&D) costs are typically deductible for tax purposes, even if they are considered capital costs.
Goodwill purchased may be amortisable over a ten-year period (10% per year). Donations of at least ILS 207 (for 2024) to approved state or charitable institutions within a tax year are eligible for a tax credit. The amount of the credit is calculated by multiplying the contribution amount by the corporate tax rate applicable during that year. However, the credit amount cannot exceed the lower of two options: (i) 30% of the corporation's taxable income for the year, or (ii) ILS 10,354,816 (in 2024). Any unused tax credits can be carried forward for up to three years, subject to specific regulations.

Business losses can offset income from any source within the same tax year. However, loss carrybacks aren't permitted. These losses can be carried forward indefinitely and used to offset income from the same trade or business or capital gains within the business, but not against income from other sources.
Payments of interest, royalties, and management fees to foreign affiliates are deductible (conditions apply).

Tax and cash incentives are provided for companies that qualify for the "Preferred Enterprise (PFE) regime", generally those who contribute to the development of the productive capacity of the economy, absorption of immigrants, creation of employment opportunities, or improvement in the balance of payments. The "Special Preferred Enterprise (SPFE) regime" applies to certain large corporations that can demonstrate their great contribution to the Israeli economy. Another regime is that of "Preferred Technology Enterprise", for companies engaged in the technology sector and that are part of a group of companies with aggregate annual revenues less than ILS 10 billion, among other conditions.

Other Corporate Taxes
Municipalities levy an annual tax on buildings, based on the size, location, and purpose of the property. Property taxes are generally imposed at the municipality level on the occupier of commercial and residential real property. Unoccupied property is generally taxed on the property's owner.
Capital gains on real estate are subject to the land appreciation tax law. The tax rate on the real gain is the applicable corporate tax rate (23% in 2024).

All property purchase is subject to tax, at rates varying between 0% and 10% depending on the status of the buyer (Israeli citizen, foreign resident in the process of obtaining Israeli citizenship, foreign citizens making Aliyah), the number of properties held (one or multiple) and the value of the real estate. The highest rate applies when the purchase price exceeds ILS 20,183,565.

Social security contributions paid by the employer for Israeli-resident employees are 3.55%, up to a monthly income of ILS 7,522 and 7.6% on the difference between ILS 7,522 and the maximum monthly income of ILS 49,030. For non-resident employees, lower rates apply: 0.59% up to a monthly income of ILS 7,522 and 2.65% on the difference between ILS 7,522 and the maximum monthly income of ILS 49,030.

Non-profit organizations are subject to a tax of 7.5% of payroll in lieu of VAT. A similar tax is levied on financial institutions, at a rate of 17% (scheduled to be increased to 18% effective January 1, 2025).

Other Domestic Resources
Israel Tax Authority

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Israeli Tax Treaties
Withholding Taxes
Dividends: Dividends paid by an Israeli resident company to another resident company from income sourced in Israel and subject to corporate taxation are not subject to withholding tax. However, dividends to Israeli resident individuals are generally taxed at a 25% withholding rate, rising to 30% if the individual controlled at least 10% of the payer company in the past year. Exemption or reduced withholding certificates can be issued by the ITA for resident companies and individuals. Dividends to non-controlling foreign entities face a 25% withholding tax, while it's 30% otherwise, with possible reductions under tax treaties or incentive schemes. Preferred enterprises distributing dividends to residents or non-residents are taxed at 20%, potentially reduced under treaties. Dividends from technological enterprises to individuals are taxed at 20%, with possible treaty reductions, while those to companies face a 4% rate, further reducible under treaties. Dividends from accumulated income since August 15, 2021, are taxed at a 15% rate for residents or non-residents, with potential treaty reductions.

Interest: Corporate income tax, currently at 23%, is withheld from interest payments to both resident and nonresident "bodies of persons." The rate for nonresident interest may be lowered under a relevant tax treaty. For resident individuals, withholding tax rates vary: 20% on interest from provident funds (15% if derived from pre-8 May 2000 deposits), 25% on bank interest (15% if not index-linked), 35% on debentures or pre-8 May 2000 government bonds held by recipients with less than 10% shares in the payer, and 47% if the recipient has at least 10% control over the payer, is its employee, or provides services or products to it. Other individual interest is subject to a 25% withholding tax (15% if not index-linked). The ITA can issue exemption or reduced withholding certificates for interest paid to resident entities and individuals. Nonresident individual interest is taxed at 25% but can be reduced under a tax treaty, while certain public bond interest paid to nonresidents may be exempt from withholding tax.

Royalties: payments made to resident entities and individuals are subject to withholding tax at 20% where the recipient can demonstrate that it maintains books of account and has filed the necessary returns; otherwise, the rate is 30%. The ITA may issue an exemption certificate or a reduced withholding certificate allowing royalties to be paid to resident companies and individuals without the deduction of withholding tax or subject to a reduced withholding tax rate. Royalty payments to nonresident entities and individuals are subject to withholding tax at 23% and 25%, respectively. The rate may be reduced under an applicable tax treaty.