Priests in Israel to Pay Tax

February 2, 2016 Taxation in Israel

Tax in IsraelJERUSALEM – Priests and other religious workers in Israel will now need to pay tax on any services, blessings, or religious artefacts that they sell.

In a recent circular the Israel tax Authority confirmed that religious services and goods should be liable for VAT and should be regarded as taxable income for the purposes of calculating income tax obligations.

The Israel Tax Authority has recently been cracking down on the tax affairs of rabbis and other religious figures in an effort to stamp out tax evasion, with a surprise tax audit of approximately 400 rabbis being carried out in December.

The Israel Tax Authority stated that any service, whether it is religious in nature or not, should be liable for income tax if the service was performed in exchange for money.

It was further stated that tax obligations will still arise even if the service provider does not ask for money, but received payment anyway.

The tax should also be applied to the value of any gifts received in exchange for goods and services.

The circular stated that along with religious services like blessings, lessons, or the writing of amulets, the tax should also apply to religious goods, such as vials of holy water and other similar items.

It is estimated that if tax inspectors enforce the clarified rules as instructed by the Tax Authority, the government could see a revenue boosts of hundreds of millions of shekels.

Photo by RonAlmog