The Ministry of Economy and Industry today released for public comment a directive on personal imports, setting out the restrictions that apply and the products for which personal imports are permitted. The directive is slated to take effect within three weeks after being signed by Minister of Economy and Industry Eli Cohen. The directive, which applies the conclusions of a joint committee of the Ministry of Finance and the Ministry of Economy and Industry, establishes the definitions and scope for personal imports and includes a new track expanding the definitions of personal imports for home construction and renovations.
The directive permits imports of up to five consumer items, or up to $1,000 (up to 30 units), whichever is greater, as long as the imports are for personal use.
Which items are included in the directive? Personal care and cosmetics; food supplements; spare parts for vehicles and transportation items such as baby seats for cars, helmets, and brake systems products; vacuum cleaners, refrigerators, clothes irons, dishwashers, ovens, and wireless equipment - computers, televisions, tablets, printers, etc.
In addition to consumer goods, the directive also recognizes personal imports for home improvement goods, including a special track with concessions for importing products for home renovation and construction. With this track, it will be possible to import larger than usual quantities, while the burden of proof that the products are for purposes of construction or renovations is on the importer.
For products requiring government approval, for example disks for auto braking systems, which require approval from the Ministry of Transport, the regulator will be required to provide approval for imports within two days.
The Ministry of Economy and Industry quotes figures published in a Bank of Israel report for 2017 referring to the effect of ecommerce, including personal imports, in reducing prices in various areas. According to the Ministry of Economy and Industry, the figures show that in sectors exposed to ecommerce and personal imports, price fell substantially in 2011-2017. Prices fell nearly 20% for personal products and cosmetics, over 50% for audio and video systems, 10% for clothing and footwear, and 15% for furniture and home equipment.
The figures also indicate that despite the major effect of ecommerce and personal imports, their proportion in monthly household spending is still low - NIS 104 a month, despite 16% growth in 2011-2015. In general, the Israeli market's exposure to imports is less than the OECD average. Figures quoted by the Ministry of Economy and Industry show that 10% of the household consumer basket of products consists of imports, compared with 19% in OECD countries.
The Ministry of Economy and Industry wants to change this situation, stating, "Personal imports are one of the tools for dealing with this gap."
The Manufacturers Association of Israel and the Federation of Israeli Chambers of Commerce are certain to protest and oppose this measure. They have frequently expressed dissatisfaction on this matter, alleging tax discrimination in favor of personal import purchases. The two organizations recently petitioned the High Court of Justice on the issue, which they called "VAT discrimination" on online purchases of up to $75. They argue that this exemption artificially lowers the price of a purchase from an overseas business, compared with a purchase or order from a business in Israel. As for imports of $1,000 or 30 items, the Federation of Israeli Chambers of Commerce alleged in the recent hearing on the subject that this amount was not appropriate for personal imports and was likely to be exploited for other purposes.
Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2018
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