Israel to start collecting VAT and income taxes from Internet companies

Israel will start collecting value added tax (VAT) and income taxes from foreign Internet companies, including Google, Facebook, Amazon and eBay. The companies will furthemore have to register with authorities, ‘so that transactions are liable for VAT.’ Until now, foreign companies’ income for services in Israel were only subject to taxation if the income was generated in Israel (i.e. if the company had a ‘permanent establishment’). Now, the definition of ‘permanent’ has been expanded ‘to include online businesses, where the economic activity of the foreign company is mainly through the Internet.’