Tel
144 Menachem Begin Road Building A Tel Aviv 6492102 Israel
Indirect tax contacts
Avi Bibi
+972 (3) 623-2535 avi.bibi@il.ey.com
Regev Itzhaki +972 (3) 623-2535 regev.itzhaki@il.ey.com
Amiel Yitshak-Halevi
Ben Buchnik
+972 (3) 568-7423 amiel.yitshak-halevi@il.ey.com
+972 (3) 563-9893 ben.buchnik@il.ey.com
Dana Edelstein +972 (3) 568-7419 dana.edelstein@il.ey.com
Dana Halifi +972 (3) 623-2782 dana.halifi@il.ey.com
Keren Israeli-Arviv 972 (3) 568-0387 keren.israeli-arviv@il.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name Mass erech mussaf (Ma’am)
Date introduced 1 July 1976
Trading bloc membership None
Administered by Ministry of Finance (Israeli Tax Authority) (www.taxes.gov.il/vat)
VAT
Zero-rated (0%) and exempt
Bimonthly Taxable persons with annual turnover below NIS1.52 million
General
Registration Annual turnover of NIS99,893; for lower turnover registration as an “exempted VAT-registered entity” is required
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT is charged on the following transactions:
• A sale of an asset, including real estate, by a taxable person in the course of its business, if the asset is located in, delivered in or exported from Israel (delivery from a location outside Israel to another location outside Israel is out of the scope of the Israeli VAT law; this has implications for the input tax deduction (see Section F)
• Sale of intangibles or the provision of services by a taxable person in the course of its business
• Sale of an asset if the input tax on its purchase or import has been deducted
• An occasional transaction with respect to real estate (depends on the status of the seller and the purchaser and the classification of the asset sold) and including incidental service or sale of goods for commercial purposes
• Provision of “services” by non-Israeli suppliers to Israeli customers
• Support benefit or subsidy – including those not directly linked to the price of any supply (this may even extend to debt forgiveness) – provided to a taxable person unless an exemption applies
• Importation of goods (including intangible property) into Israel
The term “taxable person” refers to a person or an entity that sells assets or provides services in the course of its business, provided that it is not a nonprofit organization or a financial institution, which are subject to different tax regimes. (In general, a nonprofit organization is subject to salary tax at the rate of 7.5%, which is calculated based on its salary expenses. A financial institution is subject, in addition to salary tax at the rate of 17%, to profit tax at the rate of 17%, which is calculated based on its profits.)
Taxable persons also include entities that make occasional transactions. An entity that has annual turnover not exceeding NIS99,893 and that does not fall under the list of exceptions (for example, advisors and professionals) is not liable to VAT register as a trader but must nevertheless register as an exempt entity for VAT purposes.
The term “asset” includes real estate and goods. “Goods” include all kinds of tangible and intan gible property and all kinds of rights or interests but not securities, shares or similar negotiable instruments.
The term “service” includes all types of services provided to others for a consideration – includ ing, importantly, credit transactions and money deposits. It does not include services provided by an employee to their employer.
An occasional transaction is the supply of goods or services in the course of a commercial activ ity. For real estate, it includes the sale of real estate by entities that are not in the real estate business to taxable persons, as well as the sale of land (excluding certain residential properties) by such sellers to nonprofit organizations, financial institutions or to certain purchasers specified in the Real Estate Tax Act.
C. Who is liable
A taxable person is liable for VAT on the sale of assets or the supply of services.
Several exceptions to the above rule exist, such as the following (in which the reverse charge applies):
• For supplies of services or intangible property by non-Israeli suppliers to Israeli customers
• For certain supplies of services made by individuals, that their main income is derived from salary, allowance or pension
• Similarly, for certain purchases of real estate, the purchaser is liable to reverse charge the VAT
For imported goods, the importer of record is liable for VAT.
Exemption from registration. The Israeli VAT law does not contain any provision for exemption from registration. However, there might be a circumstance under which a business can apply to the Israeli VAT tax authorities in order to receive approval that it is not required to register for VAT in Israel. Such an approval depends on the specific circumstances and is given on a caseby-case basis.
Voluntary registration and small businesses. The VAT law in Israel does not contain any provision for voluntary VAT registration.
Group registration. Registration as a VAT group is possible for two or more VAT-registered enti ties that are the following:
• A company and its subsidiaries
• Two or more subsidiaries owned by the same parent company
• A partnership and a partner that holds 50% or more of the rights in the partnership
• Entities whose bookkeeping is done jointly
The group members share a group VAT number and submit a single monthly or bimonthly VAT report. In addition, each member must submit an annual detailed digital VAT report, detailing the annual sum of output tax and input tax with respect to intragroup supplies and the sum of output tax and input tax with respect to third parties. Invoices for intragroup supplies are not reported as part of the group’s monthly/bimonthly report, unless the VAT is not deductible as input tax.
Group members are jointly and severally liable for each other’s VAT liabilities. In practice, they may also be liable for other tax liabilities in certain circumstances.
There is no minimum time period required for the duration of a VAT group.
Non-established businesses. A foreign resident that makes transactions in Israel, as defined in the VAT law, or that acts as a financial institution or nonprofit organization in Israel must register for VAT in Israel and appoint a local representative (see below) to act on its behalf with respect to VAT matters within 30 days of beginning to carry on such activities in Israel.
The term foreign resident means an individual who permanently resides outside Israel or a com pany that is registered or incorporated outside of Israel.
For the purpose of zero-rate VAT for supplies made to foreign residents, additional requirements apply to meet the definition of “foreign resident.”
Tax representatives. Where a foreign resident is liable to register for VAT in Israel, for example, because it plans to make taxable supplies, it also must appoint a local representative, being both an Israeli citizen and resident, which would be liable to the tax authorities jointly and severally with the foreign resident.
Reverse charge. Supplies of services received from overseas must be self-accounted by the Israeli recipient. As for supplies of intangible property from overseas, the VAT on this should generally be withheld by the Israeli bank transferring payment to the overseas supplier. Failing that, the VAT should be self-accounted.
Domestic reverse charge. The domestic reverse charge applies in various scenarios, such as where certain services are supplied by a nontaxable person to a taxable person and also where land is sold or leased by a nontaxable person, so as to amount to an occasional transaction, etc.
Digital economy. The Israeli tax authorities have published a circular regarding internet activity of foreign entities in Israel. According to the circular, if it has been established that where a foreign entity provides services via the internet to Israeli customers and the services are con nected to Israel, it is required to register for VAT purposes in Israel. In these circumstances, the foreign entity will be subject to the provisions of the Israeli VAT law. Such a position may be
established via certain indicators, such as the fact that the services are directed and aimed at Israeli customers, it has been established that the foreign entity has a permanent establishment in Israel for income tax purposes, the foreign entity has a business mechanism in Israel, economic presence in Israel, etc.
It should be noted that if a foreign entity that provides internet services to Israeli customers is required to register for Israeli VAT in accordance with the circular, it will not be considered as a “foreign resident” for certain VAT issues, and therefore services rendered to it by Israeli service providers, as well as intangibles sold to it by Israeli vendors, will be subject to VAT at the full rate.
In general, a foreign service provider that meets all the conditions specified in the circular is requested to register for VAT purposes is Israel. However, it should be noted that according to the Israeli Court ruling, the tax authorities currently do not enforce the registration duty.
In addition, the Israeli Ministry of Finance has published a draft bill to amend the Israeli VAT law, according to which foreign companies that provide “digital services” (as defined in the bill) to nontaxable persons, i.e., private consumers that are not business/nonprofit organizations/ financial institutions (business-to-consumer (B2C) transactions), will be required to register in Israel. The registration will not be a “regular VAT registration” but rather a special designated registration only regarding this specific activity. Please note that the bill has yet to pass and is not yet enacted and enforced. However, if the service is provided by the foreign supplier to the dealer, nonprofit or financial institution, the recipient of the service will be the taxpayer, in accordance with the current legal framework. There are no other specific e-commerce rules for imported goods in Israel.
Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in Israel. As outlined above under the Digital economy subsection, the suggested regime will also apply to online marketplaces and platforms that provide digital services and/or intangible assets to private consumers (B2C).
Registration procedures. An application must be submitted within 30 days of exceeding the registration threshold to register for VAT. Failure to do so will result in a fine of 1% of missing VAT plus interest. To register as a business, the registration should be made at the local VAT office nearest to the company’s office. Online registration is not possible for overseas taxable persons, though it is for Israeli taxable persons.
The application’s relevant documents include, among other things, appropriate forms (VAT Form 821), certificate of incorporation/registration with the Israeli Registrar of Companies, articles of association, certain shareholders’ minutes, information regarding the company’s directors (includ ing copy of ID/passport), proof of the existence of an Israeli bank account, lease agreement (or other sufficient documents, as applicable), etc. For foreign companies, an additional form is required (VAT Form 22) of the appointment of a fiscal representative.
For some documents, the original hard copy is required to be submitted.
Deregistration. Israel has no separate registration and deregistration thresholds. A business whose turnover falls below the registration threshold may be deregistered.
Changes to VAT registration details. Within 15 days from the date of the change, the taxable person (referred to as a “dealer”) needs to notify the VAT office in which it is registered using Form 822, “Dealer details update form,” or a letter stating the change.
Common changes include change of type of activity, change of address, change of means of communication, etc.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 17%
• Zero-rate: 0%
The standard rate of VAT applies to supplies of goods and services unless a specific measure provides for the zero rate or an exemption.
Moreover, profit tax and salary tax at the rate of 17% apply to financial institutions, and salary tax at the rate of 7.5% applies to nonprofit organizations.
Examples of goods and services taxable at 0%
• Exports of goods
• Supplies of intangibles to foreign residents
• Supplies of services to foreign residents, subject to broad use and enjoyment restrictions (for example, the services do not relate to assets in Israel, and the services are not also provided to an Israeli resident in Israel):
The term “foreign resident” is defined as an individual who permanently resides outside Israel or an entrepreneur that is registered or incorporated outside Israel, provided that the individual or entrepreneur is not engaged in a business activity in Israel
• 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
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Leasing of apartments for residence purposes for a period that does not exceed 25 years
• Transactions made by a business that is below the registration threshold
• Sales of diamonds and precious stones
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Israel.
E. Time of supply
For the supply of goods, generally the chargeable event takes place upon delivery – except for qualifying small manufacturers; these use the cash basis.
For the supply of services, the cash basis generally applies. However, the chargeable event takes place when the services are supplied in the following circumstances:
• The consideration of services is affected by the fact that the transaction is between related par ties.
• The consideration has not been agreed.
• At least some of the consideration is not in cash.
• The services are supplied by certain businesses whose annual turnover is over NIS15 million.
Where the services are supplied in parts, a chargeable event occurs in respect of each part. Where services cannot be said to be made up of different parts, a chargeable event takes place upon each payment being made, in respect of that amount, or on completion of the services, whichever hap pens first.
Deposits and prepayments. In general, an amount paid as a deposit or as a guarantee to return borrowed goods or to enssure the performance of a transaction or the rights of a person con nected to a transaction will be deemed part of the transaction price after six months from the day they were paid, unless they have been returned or became part of the price of the transaction previously. However, if the parties agreed in writing that the deposit or guarantee will be for a period longer than six months, then they shall be deemed part of the price one month after the end of the agreed period.
Continuous supplies of services. Where the services are supplied in parts, a chargeable event occurs in respect of each part. However, where services cannot be said to be made up of different parts, a chargeable event takes place upon each payment made, in respect of the amount paid, or on completion of the services, whichever happens first.
Goods sent on approval for sale or return. There are no special time of supply rules in Israel for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above), and the time of supply is when the delivery of goods takes place.
However, in cases of consignment, if agreed in writing that not more than 10% of the consideration (or a higher percentage set by the Minister of Finance) shall be paid before the sale of the goods, and if not sold they can be returned, the time of supply will be deemed when the goods are sold by the consignee.
Reverse-charge services. Both for supplies of services received from overseas and those that fall within domestic reverse-charge rules, the chargeable event takes place upon each payment in respect of the amount paid, or on completion of the services, whichever happens first.
Leased assets. Leasing of assets is included within the definition of a “sale.” However, the chargeable event takes place on a cash basis, i.e., upon each payment, in respect of the amount paid.
Imported goods. VAT on imported goods is due when the goods are cleared through customs. A tax clearance mechanism is in place between Israel and the Palestine Autonomous Areas for transfers of goods between their territories. VAT, purchase taxes and import taxes are based on the actual transfer of goods (not on the reported transfer of goods).
Real estate transactions. For real estate transactions, VAT is due when the possession of the asset is transferred to the purchaser or when the asset is registered in the name of the buyer, which ever is earlier. For construction work, the tax is due when the work is completed or when the possession of the asset is transferred to the customer, whichever is earlier.
In addition, with respect to the above rules, if a payment is made before the above dates, VAT is due for that payment on the date of payment.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax, which is the VAT charged on assets (purchased locally or imported) or services supplied to that taxable person for business purposes, if such items are used or will be used for taxable transactions. This excludes, for example, private expenditure and expenditure that is used for out-of-scope transactions or exempt transactions.
A taxable person generally recovers input tax by deducting it from output tax, which is the VAT charged on supplies made by it, provided that the proper tax invoices or importation documents are received in support of the input tax deduction and that the deduction is claimed within the time limit of six months after the date of issuance of these documents (a procedure for an exten sion is available).
The time limit for a taxable person to reclaim input tax in Israel is six months. However, there is an option to apply for an approval for late deduction up to five years (60 months).
Nondeductible input tax. As mentioned above, input tax can only be deducted if purchases are used for taxable transactions, provided all technical requirements are fulfilled. Accordingly, nondeductible input tax includes among other things, certain types of business and staff entertainment, and input tax attributable to particular transactions such as costs related to share trans actions, out of scope transactions, certain pre-registration costs (see below), etc.
Examples of items for which input tax is nondeductible
• Certain employee benefits, e.g., gifts to the employees
• Purchase/import of a private vehicle, with the exception of certain types of dealers
• Accommodation and hospitality expenses, excluding expenses related to the accommodation of persons from abroad
• Expenses relating to the sale or purchase of shares, subject to exceptions
Examples of items for which input tax is deductible (if related to a taxable business use)
• Vehicle maintenance expenses, if the vehicle does not leave the business premises.
Please note, there is a proposal to add a new regulation to the existing VAT regulation that deter mines that no input tax deduction will be allowed for fuel used for vehicles unless measuring fuel consumption has been installed in the vehicle for which the deduction was claimed. Also required is a monthly concentration report in respect of all refueling regarding the vehicle for that month. At the time of preparing this chapter, the proposal has not yet been confirmed or implemented.
• Accommodation and hospitality expenses related to the accommodation of persons from abroad
• Petty cash and certain refreshments
Partial exemption. Rules related to partial exemption may apply to expenses used for both taxable and nontaxable transactions, e.g., business and private use, a business that makes both taxable and exempt supplies, etc. In such cases, the partial exemption percentage is generally calculated on a pro rata basis according to the nonbusiness use of the expense. Unless the taxable person’s calculation is rebutted or otherwise determined by the VAT Director, it is presumed that where most of the input tax is used for making taxable supplies, two-thirds of the input tax is deductible; whereas, where most of the input tax is used for making nontaxable supplies, only one quarter of the input tax may be deductible.
Approval from the tax authorities is not required to use the partial exemption standard method in Israel. However, the implementation of the standard method may be examined during a VAT audit. Special methods are not allowed in Israel.
Capital goods. Input tax incurred on the purchase of capital goods may be deductible subject to the general input tax deduction rules (see above). Accordingly, if the goods are used for taxable supplies input tax may be fully deducted, subject to the general VAT rules. If the goods are used for both taxable and nontaxable or exempt transactions, a partial deduction may apply.
Refunds. If the amount of VAT recoverable exceeds the amount of VAT payable in a reporting period, the excess amount may be refunded within 30 days. A refund can be obtained by submitting the periodic VAT report, the additional detailed digital report and copies of the tax invoices exceeding the relevant amount if requested by the authorities. The authorities may postpone the refund and conduct an examination or audit.
Pre-registration costs. Input tax on such costs is generally nondeductible. However, on applica tion by a taxable person, the tax authorities may allow input tax incurred before registration to
be deducted, where the authorities are satisfied that the relevant inputs are setup costs, i.e., inputs bought at a time when the business was being set up and used for that purpose.
Bad debts. VAT paid by a taxable person in connection with bad debts (i.e., if a supply was made and the VAT was declared, but the customer did not pay the consideration agreed) may be recov erable by issuing a credit note, provided all conditions and requirements stipulated in the VAT regulations as well as in the VAT authorities’ guidelines are met.
The main conditions for issuing a credit note and reclaiming VAT paid on bad debts includes insolvency or liquidation of the customer, as well as proof of reasonable collection efforts. Such a reclaim requires notice to the authorities. Such a reclaim may be submitted not earlier than six months from the date on which a tax invoice was issued and not later than three years from that date (however, an extension is available under certain conditions).
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Israel.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses in Israel is not recoverable. While Israeli law has no mechanism that allows for this per se, i.e., any equivalent to the EU’s 13th Directive, the scope of certain types of relief under Israeli law is broader than under EU law, with the result that non-established businesses may not incur VAT on supplies that would attract VAT in their home jurisdictions. One example of this is hotel accommodation supplied to foreign resident persons, including incidental supplies such as catering.
H. Invoicing
VAT invoices. Only a taxable person may issue a tax invoice and it must do so if requested by the customer. A tax invoice is required to support a claim for input tax deduction. The invoice must be issued within 14 days. The authorities intend to assign invoice numbers to each VAT-registered entity.
Credit notes. A VAT credit note may be used to reduce the amount of VAT charged on a supply. The credit note must reflect a genuine mistake, an overcharge, an agreed reduction in the value of the original supply or cancellation of the transaction. A credit note may also be used in a case of bad debts if all reasonable efforts have been exhausted to collect the debt and if all of the regulation requirements are fulfilled.
Electronic invoicing. Electronic invoicing is not mandatory in Israel, but it is allowed. It may only be used subject to strict technical rules concerning digital signature, electronic delivery, record keeping, etc.
Simplified VAT invoices. In general, simplified tax invoices are not permitted. However, for retail supplies, the cashier slip might be used as an invoice, subject to certain conditions.
Self-billing. Self-billing is not allowed. Special exceptions may be obtained from the tax authori ties.
Proof of exports. The export declaration issued by Israeli Customs and the commercial invoice are generally sufficient evidence for export.
Foreign currency invoices. The taxable amount must generally be stated in the domestic currency, which is New Israeli shekel (NIS). A foreign currency may be shown in addition, provided that the exchange rate on the day the invoice is raised is also shown. Alternatively, taxable persons may apply to the authorities for permission to raise foreign currency-only invoices.
Supplies to nontaxable persons. There are no special rules regarding invoices issued for supplies made by taxable persons to private consumers.
Records. Israeli tax regulations (bookkeeping) outline the various books and records that a com pany must maintain, such as invoices, receipts, inventory lists, fixed assets registrar and more. These regulations dictate the format, nature and timing of each document recorded in the books. The use of an electronic record system is permitted if the bookkeeping software is approved by the tax authorities. The accounting records language can be either Hebrew or Arabic but using English may be permitted if an approval is obtained in advance from the tax authorities. The accounting records should be maintained in the domestic currency (New Israeli shekel) unless a special approval is received from the tax authorities.
Records should be kept in Israel unless a special exemption is obtained by the tax authorities.
Record retention period. VAT invoices and other bookkeeping records must be kept for a period of seven years from the end of the year, to which the records relate, or six years from the day on which the tax return for the relevant year was submitted, whichever is later.
Electronic archiving. Records may be stored electronically and must be updated quarterly. Please note that there are specific requirements in this regard. The server on which the company’s accounting records are recorded should be located physically in Israel; however, the tax authori ties may grant an authorization to hold the server outside of Israel if an accessible online backup is available at the company’s site for inspection purposes.
I. Returns and payments
Periodic returns. VAT reports must be submitted on a monthly basis if annual turnover exceeds NIS1.52 million or on a bimonthly basis if annual turnover does not exceed NIS1.51 million. Reports must be submitted by the 15th day of the month following the end of the reporting period.
Periodic payments. Payment of VAT due in full is also due by the same date as the VAT return submission deadline, i.e., by the 15th/19th/23rd day of the month following the end of the report ing period (depends on the reporting date). Payment can be made using an Israeli bank account.
Electronic filing. VAT reports are generally filled electronically via the Israeli tax authority’s website. The reports are due by the 15th/19th/23rd day of the month following the end of the reporting period (depends on the taxable person’s turnover and reporting obligations).
Payments on account. Payments on account are not required in Israel.
Special schemes. Profit margin. The taxable amount for certain types of supplies may only be the profit margin on the sale. This includes supplies of secondhand movable goods, works of art and certain residential properties where any of these supplies are made by a qualifying dealer.
Annual returns. Annual returns are not required in Israel. That said, VAT group members must file a certain type of annual return as to taxable persons in the Eilat free trade zone.
Supplementary filings. Yearly VAT group report. This is only relevant for taxable persons who report in a VAT group (see above). It should be noted that if the VAT report is a return, addi tional information (e.g., copies of invoices) might be required.
Correcting errors in previous returns. If there is an error in the VAT report, it is possible to submit a “corrective report” and indicate the correct details. The corrective report should only be sub mitted to the regional VAT office where the dealer is registered. Such amendment may lead to additional charges (VAT, as well as interest, linkage differences, etc.).
Digital tax administration. VAT online detailed report. Certain taxable persons are required to provide a detailed electronic report, including all invoices issued and received in the relevant period including the following: dealers with an annual turnover over NIS2.5 million, nonprofit organizations with an annual turnover over NIS20 million and financial institutions with an annual turnover above NIS4 million. Taxable persons are required to keep their books in accor dance with the dual accounting system. In addition, a nonprofit organization or a financial insti tution should submit an online digital report as well.
As outlined above, an online detailed digital report is required if a taxable person’s annual turn over exceeds NIS2.5 million or if the taxable person is required to keep its books in accordance with the dual accounting system. Electronic reports must be submitted by the 23rd day of the month following the end of the reporting period. Payment in full is also due by the same date.
J. Penalties
Penalties for late registration. For the late registration of VAT, penalties may be up 1% of the taxable turnover, on top of the VAT itself, plus interest, and adjusted for inflation.
Penalties for late payment and filings. A VAT-registered entity that fails to submit a report when required is liable to pay a fine of NIS214 for every two weeks of tardiness.
If a VAT-registered entity fails to pay an amount of tax when required, linkage differentials (such amount multiplied by the rate of increase of the consumer price index during the period in ques tion) and interest are payable on the amount unpaid.
Penalties for errors. If there is an error in recording any amount required in the report, it is possible to file a corrective report to state the correct details. The corrective report must be submit ted only to the regional VAT office where the file is being handled. As a result, the taxable person may be charged with interest, linkage differences and fines.
Failure to notify or late notification of changes to a taxable person’s VAT registration details is treated as a violation of the VAT law and is subject to the general penalties listed in these sections.
Penalties for fraud. There are various offenses stipulated in the VAT law, such as making false statements submitted knowingly, or under circumstances amounting to gross negligence, omis sion of reporting, assistance in unlawful deduction of VAT, forgery, concealment or destruction of documents, the use of fictitious invoices, etc. These offenses may result in additional payment of interest, linkage differences and fines, including double tax, and may even result in imprisonment if the offense is characterized as criminal.
Personal liability for company officers. According to the VAT law, those who are liable for a com pany include: an active manager, secretary, trustee, proxy, active partner, accountant, bookkeeper and any other responsible clerk. Accordingly, a company’s officers might be held responsible under certain circumstances, inter alia, according to the Israeli Companies Law. Penalties, as well as criminal sanctions, may be the same as the company’s under certain circumstances.
Statute of limitations. The statute of limitations in Israel is five years. Generally, according to the Israeli VAT law, the period of limitation regarding VAT in Israel is five years, based on a month ly basis (i.e., 60 months).
However, it should be noted that there are no “close/final” VAT assessments, meaning that as long as the respective month is within the period of limitation, it can be reviewed and audited by the authorities, even if it was previously audited.