Last-minute instructions for the ‘sweet tooth’ tax - opinion

If you were planning on celebrating the year-end this weekend, this item may add to any hangover or sober you up. It may also encourage going on a diet.

Calculating taxes (photo credit: INGIMAGE)
Calculating taxes
(photo credit: INGIMAGE)

 If you were planning on celebrating the year-end this weekend, this item may add to any hangover or sober you up. It may also encourage going on a diet. 

The Sweet Tooth Tax:

The Finance Ministry, Customs & VAT Division, saw fit to publish on December 28 an explanatory announcement to be dealt with by December 31 (https://www.gov.il/he/departments/publications/reports/pa281221-1)

The announcement tells us that according to an order published on December 14 (Purchase Tax On Goods Order [Amendment 10], 2021),  purchase tax now applies to sweet drinks, concentrates and powders held by dealers for business purposes as of midnight on December 31, 2021.

The tax will be an inventory levy applying to each liter or part of a liter of drink and to kilograms or parts of kilograms of powders as follows:

Coca Cola (credit: REUTERS)Coca Cola (credit: REUTERS)

NIS 1 per liter on drinks sweetened with at least 5 grams of sugar per 100 milliliters.

NIS 6 per liter or kilogram of concentrate or powder that will make a sweet drink with at least five grams of sugar per 100 milliliters.

NIS 0.7 on a sweet drink with less than 5 grams of sugar per 100 milliliters, or with some other sweetener, or fruit juice with “over” five grams of sugar per 100 milliters.

NIS 4.2 per liter or kilogram on various concentrates, juices and powders not mentioned above.

The above tax will not apply to a business if the total tax will not exceed NIS 10,000. A sweet drink is one falling within sections 20.09, 21.06 or 22.02 of the first schedule of the above order.

The tax is meant to cover inventories of almost all types of sweet drinks, sweetened drinks, juices, flavored water drinks and soda drinks – except for certain natural grape or lemon juices.

The tax is payable on a special web page of the Tax Authority at: https://secapp.taxes.gov.il/EmHanPayment/HazanatPirteyTashlum.aspx?cur=1

And a lengthy declaration form should be completed and filed in by e-mail at: [email protected] no later than January 30, 2022. The form asks for quantities and calculations needed to calculate the new tax.

Any questions should be e-mailed to the same address, or you can call the Tax Authority on 02-5656400, extension 4954 between 08.15 and 16.00. 

Comments:

It may be worthwhile for businesses try to sell or drink up their soft drinks and sodas by midnight on December 31. There is no mention of the new tax applying to alcoholic beverages, chocolate, candy, cakes or cookies, only sweetened drinks.

It is not yet clear whether Israel’s free-trade agreements will have any impact on the imposition of this new tax.

Israel has free-trade agreements with: Canada, Colombia, the EU, EFTA, Mercosur (Argentina, Brazil, Paraguay, Uruguay, Bolivia, Chile, Ecuador, Guyana, Peru), Mexico, Panama, Turkey, Ukraine the USA and the UK. Negotiations are ongoing with China, Vietnam, the Eurasian Economic Union (Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan).

Inventory counts – general requirements for businesses:

All businesses with inventory (stock) are required to carry out a physical inventory count this Friday, December 31 or within 10 days of that date with adjustments to arrive at the quantities in inventory as of December 31. 

Inventory generally means any items held for sale. In the case of companies, a business should invite the company auditor to visit to observe part of the count. If the inventory is held by a third party such as Amazon, check they can substantiate your year-end inventory.

Completing 2021 – individuals:

Individuals should consider everything necessary for tax purposes before the end of December, such as paying any unpaid pension (kupot gemel) and savings fund (keren hishtalmut) contributions, paying any unpaid foreign expenses, recording a year-end dividend versus a salary bonus from a privately-owned company, etc.

As always, consult experienced tax advisers in each country at an early stage in specific cases.

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The writer is a certified public accountant and tax specialist at Harris Horoviz Consulting & Tax Ltd.