Despite the tepid recommendations of the professional team of the Ministry of Finance, the Israel Tax Authority, and the Bank of Israel on the imposition of a super-profits tax on Israel’s banks published on Friday, Minister of Finance Bezalel Smotrich has decided to advance such a tax at a higher rate than expected.
Smotrich wants to impose a 15% tax on the banks’ super profits, a higher rate than the differential tax of up to 10% proposed by the professional team.
Last night, a draft bill was published for the imposition of “a special tax on the banks in the light of their excessive profitability.” The draft proposes the imposition of an additional tax on a bank that posts an annual profit more than 50% higher than its average profit in the period 2018-2022. These profits will be defined as the base profit, and the tax will be at a rate of 15%. The professional team that examined the matter recommended a graduated tax of between 7% and 10%.
According to the Ministry of Finance, the tax will bring in NIS 1.13 billion in 2026, rising to NIS 1.5 billion each year from 2027 to 2029. The bill proposes a temporary order valid until 2030.
Banks Association: Tax is contrary to public interest
The Association of Banks in Israel has reacted sharply to the proposal to collect a new special tax from the banks. The Association’s CEO Eitan Madmon said, “Completely contrary to the stance of the professional team that he himself appointed, the minister of finance decided in the dead of night to declare war on the public and to impose a tax at on it at a significant rate.
“Not only has the minister grossly breached the promise he gave only a year ago that no additional tax would be imposed, the minister has trampled on the professional stance of the people in his ministry and the Bank of Israel and is making arbitrary decisions with no economic logic and contrary to the public interest. In the coming days the minister of finance will tell the public about his war on the monopolies and on the cost of living and his concern for the public, but these slogans are nothing but deception.
“The public needs to understand that it holds about 90% of the shares in the banks, and so taxing the banks amounts to taxing the public. Furthermore, as found by the professional team appointed by the minister, the tax will lead to a reduction in the supply of credit and a rise in interest rates, which means harm to the public. The minister is thus dealing the public a double blow, to its savings and to its ability to take loans.”
Published by Globes, Israel business news – en.globes.co.il – on December 23, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
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