Off Target: U.S. Retail Giant’s Free Shipping Deal Kiboshed by Israeli Tax Bureaucrats


Target, Grand Junction, Target, States, $18.5 Million Settlement, Data Breach

Bargain-starved Israelis who thought they were getting a deal from American chain Target have been getting a rude reality check — the reality of Israeli bureaucracy — as the chain has decided to unilaterally and collectively cancel many of the orders made by Israelis during a two-day free-shipping deal.

The deal was indeed too good to be true, many felt. Word got around social media the weekend before last that Target was offering free shipping on orders made on its website to Israel — on anything. According to Israeli law, orders of up to $75 made online are exempt from Value Added Sales Tax (VAT), and orders up to $500 are exempt from purchase tax (although subject to VAT). With that in mind, many Israelis took advantage of the two-day deal to order products from the American giant, with the knowledge that they would be paying the “American price” — the same price someone from Brooklyn, Brookline or Peoria would pay if they ordered something from the site.

About 20,000 orders were placed in those two days, Channel Two reported. Sales of Target products in Israel are handled by a company called BorderFree, which automatically does currency changes and adds taxes and fees for customers outside the United States who order products from American online sales sites. In this case, Target processed the payments through BorderFree, which generally provides the final price for all transactions with all fees and taxes added.

But that was not the case with many of the Target orders, Channel Two reported. Many Israelis complained that their orders were either partially or totally canceled, after having spent hours online figuring out what to order and ensuring that they were not making orders that would be subject to taxes and fees. In other cases, Israelis found that there are taxes besides VAT and purchase tax that need to be paid — like a “snack tax,” which people who ordered American candy and salty snacks found they were asked to pay, and which is not covered by the exemptions to online purchasing. In one case, an Israeli who ordered $25 of “junk food” from Target discovered that he was to be charged NIS 500 ($115) in taxes. Target took the liberty of canceling the order.

Commenting on the debacle, Ali Yaniv, an expert in online ordering for Israelis from abroad, told Channel Two that “Target was not ready for this, the site was blocked by high traffic and in the end many of the orders were canceled. Some people who ordered snacks or other products found that there were more taxes demanded than the item ordered. Obviously they need to be better prepared to deal with laws regarding online ordering in Israel if they want to try this again.”

Target has not yet commented on the matter.


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