VAT (Mas Erech Musaf) 2027 Calculator Israel
Calculate your 2027 Israeli VAT (Mas Erech Musaf / MVM) liability or refund. Compare output VAT collected from sales with input VAT paid on business purchases. Built for Osek Murshe (registered business) according to Israel Tax Authority filing rules.
What Is Mas Erech Musaf (MVM)?
Mas Erech Musaf (MVM, Hebrew for "Value Added Tax") is Israel's consumption tax on goods and services, currently at 17% standard rate for 2027. Every Osek Murshe (VAT-registered business) collects output VAT (Ma'am Eskaot) from customers and pays input VAT (Ma'am Tashomet) to suppliers. The difference is either paid to the Israel Tax Authority (ITA) if output > input, or refunded if input > output. Osek Patur (small businesses below ILS 120,000/year) don't charge VAT but also can't reclaim input VAT.
2027 VAT Rates and Categories
Standard rate: 17% applies to most goods and services. Zero-rated (0%): exports, international transport, hotel services for tourists with passport (Eilat), fresh fruits and vegetables. Exempt (no VAT, no input reclaim): financial services (banks, insurance), residential rentals, education by approved institutions. For 2027, the rate remains 17% per the 2026 budget law, though discussions about raising to 18% continue in the Knesset.
Filing Periods and Deadlines
- Monthly: businesses with annual revenue ≥ ILS 2.46M (must file)
- Bi-monthly: revenue < ILS 2.46M (default)
Filing Deadline: 15th of the month following the reporting period
Payment Deadline: Same day as filing
2027 Rate: 17% standard
Zero-rated: exports, fresh produce, Eilat tourism
Exempt: banking, residential rent, education
Input VAT Reclaim Rules
Osek Murshe can reclaim input VAT on most business expenses: inventory purchases, office rent, utilities, software, equipment, professional services. Input VAT on passenger vehicles is restricted (only 25-66% reclaimable depending on use). Input VAT on meals, gifts, and personal expenses is not reclaimable. To reclaim input VAT, you must have a proper VAT invoice (Heshbonit Mas) with the supplier's Osek Murshe number, your details, VAT amount, and other required information per ITA regulations.
VAT Refund Process
When input VAT exceeds output VAT (common for exporters and startups in pre-revenue phase), the ITA refunds the difference. Refunds are typically processed within 30-90 days after filing. For amounts above ILS 18,000, additional documentation may be requested. The ITA pays statutory interest if refund delays beyond statutory limits. Source: Mas Erech Musaf Law 1975 and Israel Tax Authority (Rashut HaMisim) website rules updated January 2026.
Frequently Asked Questions
What is the VAT rate in Israel for 2027?
The standard VAT (Mas Erech Musaf) rate in Israel for 2027 is 17%, the same as in 2026. Zero-rated categories include exports, fresh fruits and vegetables, and Eilat hotel services for tourists. Exempt categories include banking, residential rentals, and education by approved institutions.
What is the difference between Osek Murshe and Osek Patur?
Osek Murshe is a VAT-registered business that charges VAT on sales and can reclaim input VAT on purchases. Osek Patur is a small business with annual revenue below ILS 120,000 that doesn't charge VAT but also can't reclaim input VAT. Osek Patur is simpler but loses the ability to recover VAT on expenses.
When do I get a VAT refund?
When your input VAT (paid to suppliers) exceeds your output VAT (collected from customers), the ITA refunds the difference. This is common for exporters (0% output VAT but 17% input on purchases) and pre-revenue startups. Refunds are typically processed within 30-90 days; the ITA pays statutory interest on delays beyond legal limits.
What is the VAT filing frequency?
Monthly filing is required for businesses with annual revenue above ILS 2.46M. Bi-monthly filing is the default for smaller businesses. The deadline is the 15th of the month following the reporting period (so January-February VAT is filed and paid by March 15). New businesses register with the ITA and receive their filing schedule.
What expenses cannot have input VAT reclaimed?
Non-reclaimable input VAT includes: meals and entertainment, gifts to non-employees, personal expenses, fuel for passenger vehicles (only 25-66% reclaimable based on business use), and luxury items. To reclaim input VAT, you need a proper Heshbonit Mas invoice with the supplier's Osek Murshe number, your details, and VAT amount.