Tourism Industry Erupts
Smotrich Moves to Scrap VAT Exemption for Foreign Visitors
A fierce battle is brewing over Smotrich’s plan to end VAT-free travel for tourists, with industry officials warning the policy will cripple Israel’s fragile tourism recovery. The finance ministry insists the reform will bring in billions.
A major clash is unfolding between Israel’s tourism sector and Finance Minister Bezalel Smotrich, who is advancing a plan to cancel the VAT exemption for foreign tourists, a longstanding perk that allows visitors to avoid paying tax on hotels and key tourism services, as reported by Jewish Breaking News.
Smotrich argues the change will generate billions of shekels in additional revenue for the state.
But tourism officials, along with Tourism Minister Haim Katz, warn the move could deal a severe blow to an industry already struggling to recover from the war.
Industry leaders say removing the exemption will raise costs for tourists, diminish Israel’s competitiveness against regional destinations, and ultimately drive visitors away at the worst possible moment.
The proposal is expected to spark a heated political and economic debate as it moves forward.