VAT Hits 18% High for Third Time in Israel's History

With the government facing the challenge of closing a gaping budget deficit, the Israel Tax Authority says Sunday's VAT increase will generate NIS 4.4 billion a year in new revenues.

The value-added tax rate rose from 17% to 18% at midnight last night. This is the third time since VAT was introduced in 1976 ‏(at 8%‏) that Israeli consumers will be paying 18%. VAT has never exceeded this rate, and was previously raised to the 18% high during periods of economic difficulties.