New Tax on Luxury Vehicles

The Knesset Economics Committee has approved a request by the Finance Ministry to extend through next April a luxury tax on vehicles that sell for NIS 300,000 or more. In addition, a new tax of 20% will be imposed on those vehicles. The tax will also apply to electric and hybrid vehicles that are sold for that amount or more.

Currently, the purchase tax on vehicles in Israel is 83%, with an additional imposition of Value Added sales Tax (VAT), bringing the total tax on new vehicles to 100% of the purchase price. With the addition of the new tax, the full cost of a high-value vehicle will jump another 20%, for an effective tax of 120%.

Several consumer groups have criticized the Treasury for imposing an extra tax on energy-saving electric and hybrid vehicles – much less not giving them a tax discount, Yisrael Hayom reported. In response, the Treasury said that vehicles selling at price levels of NIS 300,000 or more sell for that price because of their luxury appointments, not because of their energy-saving features.