Finance Ministry Moves to Double Tax-Free Online Import Limit to $150

The Ministry of Finance on Tuesday published a draft order to double the tax exemption threshold on personal imports—from $75 to $150—a change expected to take effect within at least 21 days.
According to the Tax Authority, the reform is projected to reduce state revenues by approximately NIS 1 billion per year.

The move significantly broadens the range of products Israelis can purchase online without paying VAT. Until now, many shoppers split orders to avoid exceeding the $75 limit—especially for clothing, shoes, accessories and household goods. The higher threshold is expected to encourage purchases of items that previously faced VAT charges

Finance Minister Bezalel Smotrich defended the reform as a pro-consumer initiative aimed at curbing high prices:

“The Israeli consumer cannot be held captive by tycoons who control the economy.”

Large retailers responded with anger, and shares of leading fashion chains fell following the announcement.
Harel Wiesel, CEO and controlling shareholder of the Fox Group, said:

“I don’t know of any country that exempts VAT to encourage Chinese or Turkish websites to compete with local companies. This move will harm small chains that are fighting to pay salaries and rent.”

What Will Change for Consumers?

According to Dr. Gali Ingber, head of the Finance and Economics Department at the College of Management:

“Now, many items that could not be split—such as baby car seats, brand-name shoes, toys, and various gadgets—will suddenly fall under the tax-exempt threshold.”

Consumers can expect broader access to:

• Car accessories

• Baby equipment

• Branded footwear

• Toys (e.g., Lego, Playmobil)

• Certain electronics

Fueling demand is the growing share of e-commerce in Israeli shopping habits. Over the past decade, clothing and footwear prices have experienced the most significant drop, driven by lower tariffs, global competition and increased online purchasing.

Online Shopping Boom: Tripling in Four Years

A State Comptroller report shows:

• The number of online packages arriving in Israel tripled between 2020 and 2024.

• The total import value jumped from $1 billion to $2.5 billion in the same period.

• 81% of packages were valued at up to $75 (VAT exempt).

• 18.5% cost $75–$500, and 0.5% were priced above $500 (subject to VAT and customs).

Benny Buchanik, founder of the 100,000-member “Kazana – I Need It” online shopping community, said:

“Consumers already know how to buy smart. But this move will expand the market, because people who were afraid of exceeding the $75 limit will now feel freer to purchase.”

He added that strong personal import activity tends to push local prices down, benefiting the wider public—not only online shoppers.

But Will Prices Actually Fall?

For many items, price gaps remain significant. Examples:

• Marshall portable speaker:

  • Israel: ~700 NIS

  • Amazon: 392 NIS (including shipping, VAT-exempt)

• Lego Stitch set:

  • Israel: 270 NIS

  • Amazon: 243 NIS (including shipping)

But not all products are accessible. Manufacturers like Apple, JBL, and Lululemon restrict Amazon from shipping certain items abroad to protect local importers.

For instance:

• Nike Air Force (white)

  • Israel: 559 NIS at Foot Locker; 423 NIS at Terminal X

  • Abroad: 580 NIS (Asos); ~457 NIS on Amazon

  • Savings: minimal and may not justify delivery time or risk

VAT is calculated only on the product price, not shipping.

Dr. Ingber warns that the impact on the broader cost-of-living crisis will be limited:

“The main population ordering online is young people, buying makeup, cosmetics, clothing and shoes. These are not the populations worst affected by cost of living.”

She noted that lower-income families—those hit hardest by rent, electricity, municipal taxes and food prices—are not major online shoppers.

“They could have lowered VAT back to 17%, which would help far more people across more sectors. But reducing VAT is politically less popular than telling people they can order for $150 without VAT.”