VAT Savings for Tourists in Israel
Visitors to Israel (i.e. non-citizens) benefit from zero-rate on VAT (Value Added Tax) - usually around 18% - on a variety of purchases and services.
The VAT exemption for tourists is only valid in stores participating in the VAT refund program (a sticker denoting the shop's participation is usually placed on the shop door or window). The exemption does not include food, drinks, or tobacco, and each invoice must be for a minimum purchase around US $100 (400 shekels including the VAT tax).
Although the shopkeeper should be well aware of the protocol, you can expect that they will place the purchases with the special VAT Invoice, known as a “Refund Invoice”, in a sealed, transparent nylon bag. Make sure that the required details are filled out accurately on the refund invoice and that the shopkeeper places both the goods and the refund invoice in the bag before it’s sealed. Remember not to open the bag until it is presented for VAT refund.
VAT can be redeemed at your departure point at airport, land, or seaport border controls. Note that it must be done before departure and can’t be redeemed once abroad.
If you are departing from Ben Gurion Airport (Tel Aviv Airport), and would like to receive a VAT refund on items to be checked in with your luggage, you can go to the VAT refund counter at Change Place Ltd. before the security check. Here you’ll need to present your flight ticket, your passport, and the sealed bag. You’ll receive the VAT refund after you pass through passport control.
For full details on the VAT refund program, you can read the relevant section in the Israel Tax Authority's English site for tourist information.