In August 1985 a Free Trade Zone law was passed in Eilat to encourage business growth, jobs, and development, while increasing tourism to the area.  Eilat residents would enjoy tax benefits to help offset the added costs due to geographical distance, while tourists would enjoy lower prices and enrich the country's foreign currency coffers.  Various adjustments to the law have been made over the years, and below is a general summary for your convenience of how the law presently applies.

Exemptions from VAT:

1) Goods purchased from a business outside Eilat by an Eilati business-owner (only!) for his business in the Eilat area are exempt from VAT, except items on list below.

There is no VAT exemption on purchase of goods and/or services outside Eilat by individuals even if they are Eilat residents.

2) Services purchased from a business outside Eilat by an Eilati business-owner are liable for full VAT, except for services in second list below.

3) Goods or services located in Eilat and sold by an Eilati business for consumption or use in Eilat (apart from list below) are exempt from VAT.

Items liable for full VAT

...when sold by a non-Eilati business to an Eilati business, or by an Eilati business to private consumers (i.e. exceptions to No. 1 above):

Vehicles (except work or commercial vehicle detailed in VAT regulations)

Colour television (except for use in hotels)

Household dishwasher

Household clothes dryer

Deepfreeze

Video-tape system

Video tape camera

Stereo system

Cigarettes, tobacco, and their products

Jewellery or watches valued over $200.

Services exempt from VAT:

...include the below services when given by a non-Eilati business to an Eilati business for use in the business (i.e. exceptions to No. 2 above):

Shipping of goods to Eilat.

Services of installation, operation, maintenance, or repair of these goods: lifts, air conditioning systems, industrial refrigerators, automatic data processing machines.

Vehicle.

Dental technical services.

Architectural services for hotels.

Purchase of hotel services.

Management services for hotel that the manager has approved:  Bookkeeping, accounting, tax consultancy, legal services, advertising, registration of real estate, financial consultancy, marketing of hotels.

It should be emphasised that the VAT exemptions are designated for goods or services to be used in Eilat. 

Please be advised that this info is not necessarily complete and may be subject to change without this website being aware of such changes.

For further information, please contact the Customs and VAT office in Eilat at 08-6372121 / 6372424.