Barkat opposes expanding VAT exemption on personal imports

Minister of Economy and Industry Nir Barkat has called on Minister of Finance Bezalel Smotrich to reconsider the proposal, which he says will damage business and growth.

Minister of Economy and Industry Nir Barkat wrote to Minister of Finance Bezalel Smotrich this evening calling on him to reconsider the proposal to expand the exemption from VAT on personal imports to $150. Barkat states that the measure that Smotrich is promoting “is flawed by partial vision and does not rest on any adequate factual basis.”

Barkat writes that Smotrich announced his proposal “without any economic examination or international comparison, and without its impact on the economy as a whole being considered.” He argues that although it will have an impact on the cost of living, “alongside this is the expected damage to small and medium-size businesses, and ultimately damage to economic growth.”

Smotrich publishes order doubling personal imports tax exemption

Barkat presents alternatives that he says will achieve the same aim without hurting businesses. “The aim of your proposal can be achieved by more effective tools without harming the business sector and local manufacturers,” he writes. Among his proposals are reducing the rate of VAT on electricity and water, and a differential rate of VAT on fruit and vegetables. These measures, he says, “Will create widespread benefit to all strata of society, and will result in genuine price reductions and aid growth.”

“The original proposal should be reviewed and a balanced alternative should be formulated swiftly that will achieve the joint aims of reducing the cost of living and strengthening the Israeli economy,” Barkat concludes.

Published by Globes, Israel business news – en.globes.co.il – on December 11, 2025.