Knesset cancels VAT exemption hike on personal imports

The Knesset plenum last night voted to cancel Minister of Finance Bezalel Smotrich’s order to double the VAT exemption on personal imports from $75 to $150. Only 25 MKs voted for the order while 59 MKs voted against, after Prime Minister Benjamin Netanyahu allowed coalition members a free vote. Among the Likud MKs opposing the higher exemption were Yuli Edelstein, Eli Dallal and Hanoch Milwidsky.

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Smotrich signed the order at the end of December 2025 in order, he said, to bring down the cost of living. But the decision sparked widespread opposition in the trade sector, especially among small businesses in the fashion industry, which are the main victims of the decision. According to estimates, the cost of implementing the order is about NIS 1 billion in tax revenues.

After signing the order, the Federation of Chambers of Commerce worked to form an opposing bloc among coalition members, so there would be a majority in the Knesset to strike down the order. Some Likud MKs shared the Federation of Chambers of Commerce’s position, including Eli Dellal, Sasson Guetta, Tali Gottlieb and David Bitan, chairman of the Economics Committee.

At the press conference during which he signed the order, Smotrich said that “Unfortunately, the Israeli economy is controlled by a small number of strong monopolies. Israeli citizens enter a mall and encounter a market controlled by a handful of controlling individuals who allow themselves to oppress them. Now they cynically mention small businesses, but the truth is that they are the first to be harmed by the dominance of monopolies. Those small business owners get up every morning and fight for their existence against huge monopolies. Right after them, the ones who are harmed in line are all of us.”

Published by Globes, Israel business news – en.globes.co.il – on February 24, 2026.

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