Limit for online imports tax exemption to remain $75

online shopping credit card
online shopping credit card

A government committee does, however, recommend easing regulations applying to personal imports.

The exemption from import tax for those making online orders will remain $75, compared with a global average exemption of $200. After three months, the committee formed by the government in June and headed by Ministry of Finance deputy budget director Shira Greenberg in cooperation with Ministry of Economy and Industry director general Shay Rinsky, has completed its work. The committee has recommended a series of benefits for easing the process of making online purchases.

The committee's recommendations for removing barriers for personal imports (online buying) focus on delivery and regulatory procedures that delay purchases, for example the quantities and authorizations required by various government ministries. For the Ministries of Finance and Economy and Industry, personal imports are a tool for enabling consumers to cope with the cost of living by buying overseas products at much cheap prices than those available at stores in Israel.

The increase in the proportion of online shoppers comes as no surprise. The committee's point of departure and the background for its founding is the volume of online purchases among Israeli consumers. A probe by the Ministry of Economy and Industry found that as of 2016, online retail business in Israel totaled NIS 7 billion, including NIS 2.9 billion in personal imports; 3.7 million buyers made personal imports accounting for 40% of all online purchases in Israel. The market has grown by 22% annually since 2013, and the number of buyers has grown by 5%.

The ceiling on tax-free personal imports to Israel is substantially lower than in most countries (in the US, it has been raised to $800). This subject has been discussed extensively, including by the committee, from the perspective of both those conducting online sales and delivery and the consumers. The pressure to protect local businesses, especially small businesses, prevented an increase in this ceiling, and the continuation of the low level of exemption in Israel means that the average personal import purchase by Israelis will continue to be $70 or less, matching the exemption ceiling. Many people have learned to split up their buying, but it should be kept in mind that purchases of imported products separated by a few days will be regarded by the customs authorities as a single package.

The concessions recommended by the committee involved the procedures that currently delay deliveries and make them more expensive. If and when these recommendations are implemented, it will be easier for consumers to make purchases, including in categories in which personal imports are currently less common, such as spare auto parts.

The committee's final recommendations will be put in a final report in the coming days. The report will be submitted to the Ministers of Finance and Economy and Industry, and will be transferred for a public hearing after the Jewish High Holy Days.

In its conclusions, the committee states, "Excessive regulatory requirements lengthen the process of releasing products from customs, sometimes for an extremely long time, make it difficult and unclear to the consumer, and are liable to impose high costs that render the transaction not worthwhile. There are barriers in the way of personal import business ventures. For example, only 30% of the current products on US website Amazon.com are delivered to Israel, among other things because there is no direct delivery to Israel."

There is currently no absolute distinction between personal and commercial imports. The committee recommends legislation incorporating all the personal import regulatory requirements. The committee proposes that the Minister of Economy and Industry issue a personal import order establishing a clear distinction between a free imports order dealing in the regulatory requirements for commercial imports and the personal import regulatory requirements.

Making information accessible

In order to make the requirements clear, transparent, and simple for consumers, the committee is proposing the establishment of a government website on which the relevant information for personal imports can be obtained, including information about the legality of the required imports and contact information for the relevant ministries for clarifications. The website will also have links to online forms and the expected taxes and fees. It has also been recommended that permits from the ministries be issued online, and that the system be synchronized with the customs systems in order to simplify and expedite release of the product from customs.

Service convention - it is being proposed that the authorized authorities establish a service convention for personal imports in order to enhance transparency and the consumer's certainty about the personal import process and the times needed for obtaining permits. The convention will be anchored in personal import legislation, and times for releasing products will be monitored for the various authorities involved.

The state has already realized that overseas prices are painfully cheaper. The Ministry of Economy and Industry publishes price tables from time to time highlighting the differences that consumers are well aware of, and the committee therefore recommends continued government monitoring of personal import prices, including international comparisons, with an expansion of the tools offered to the consumer in personal imports, and consideration of a mechanism for simplifying the VAT credit process if the package purchased is returned overseas.

"The committee's recommendations are based on the data and barriers that it sees. The Israeli economy features a high degree of concentration that constitutes one of the reasons why the prices of many consumer products in Israel are higher than the OECD average," the Ministry of Finance states in its announcement. "According to figures compiled by the Ministry of Finance chief economist, the ratio of commercial imports of products for household consumption to household spending is 10%, compared with an OECD average of 19%. Among other things, this figure indicates the presence of customs and non-customers trade barriers in the Israeli economy for the purpose of protecting local industry."

The committee used figures from several leading websites, including eBay. eBay's figures show that Israel is one of the 15 leading countries in the world in the number of buyers and sellers in personal imports in 2017. 95% of web surfers in Israel are also buyers, compared with 81% in Germany and 77% in the US. Israelis buy an average of 36 times a year, compared with 43 in the US and 32 in the UK.

Published by Globes [online], Israel Business News - www.globes-online.com - on September 19, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

online shopping credit card
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