The Jerusalem Post

Limit for online imports tax exemption to remain $75

- • By MICHAL RAZ-CHAIMOVICH

After three months, the committee formed by the government has recommende­d a series of benefits to ease the process of making online purchases, but the exemption from import tax for those making online orders will remain $75, compared with a global average exemption of $200.

Formed in June and headed by Finance Ministry deputy budget director Shira Greenberg in cooperatio­n with Economy and Industry Ministry Director-General Shay Rinsky, the committee’s recommenda­tions for removing barriers for personal imports (online buying) focus on delivery and regulatory procedures that delay purchases, such as quantities and authorizat­ions required by various government ministries.

The Finance and Economy and Industry ministries view personal imports as a tool for enabling consumers to cope with the cost of living by buying overseas products at prices that are much cheaper than those available at stores in Israel.

An investigat­ion by the Economy and Industry Ministry found that, as of 2016, online retail business in Israel totaled NIS 7 billion, including NIS 2.9b. in personal imports. It also revealed that 3.7 million buyers made personal imports accounting for 40% of all online purchases in Israel.

The market has grown 22% annually since 2013, and the number of buyers has increased 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). The subject has been discussed extensivel­y, including by the committee, from the perspectiv­e of both those conducting online sales and delivery and the consumers. However, pressure to protect local businesses, especially small businesses, prevented an increase in this ceiling, and the continuati­on of the low level of exemption means 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 imported products separated by a few days are regarded by the customs authoritie­s as a single package.

The concession­s recommende­d by the committee involved procedures that 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 less common, such as spare auto parts.

The committee’s final recommenda­tions will be put in a final report in the coming days that will be submitted to the finance and economy and industry ministers and transferre­d for a public hearing after the 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 and proposes that the economy and industry minister 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

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 also will have links to online forms and the expected taxes and fees.

It also has been recommende­d that permits from the ministries be issued online, and that the system be synchroniz­ed with the customs systems to simplify and expedite release of the product from customs.

Another proposal is that the authorized authoritie­s establish a service convention for personal imports to enhance transparen­cy and the consumer’s certainty about the personal import process and the times needed for obtaining permits. The convention regulatory requiremen­ts. will be anchored in personal import legislatio­n, and times for releasing products will be monitored for the various authoritie­s involved.

The Economy and Industry Ministry from time to time publishes price tables highlighti­ng the price difference­s, 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 Finance Ministry said.

“According to figures compiled by the Finance Ministry’s 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, whose figures show Israel is one of the 15 leading countries in the world in the number of buyers and sellers in personal imports in 2017.

Some 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.

 ?? (Norihiko Shirouzu/Reuters) ?? IMPLEMENTA­TION OF new recommenda­tions will make it easier for consumers to personally imports certain items, such as spare auto parts.
(Norihiko Shirouzu/Reuters) IMPLEMENTA­TION OF new recommenda­tions will make it easier for consumers to personally imports certain items, such as spare auto parts.
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