Further to our story last month, it has now been confirmed that Israel has reduced its VAT rate to 17% from the old rate of 18% from 1 October 2015.

The move is in part due to strong growth in tax collections.

The 18% rate has been in force since June 2013, and the Israeli government has repeatedly changed the VAT rate over the years.

It should be noted that the rate change may not be a long term measure as the Prime Minster was quoted, in response to the question of what will happen if tax collections stopped growing, as saying ‘“Then we’ll go back and raise VAT.”