Value-Added Tax (VAT) is a tax that all Israeli consumers pay. It is a flat rate percentage of each sale or purchase that is included in the price of goods and services, imposed by the country as a source of income. As of 01/01/2016, the Israeli VAT rate is 17 percent.
To encourage tourism in Israel, tourists having purchased certain goods during their visit are entitled to a VAT refund when they depart Israel. When purchasing your items, ask the store clerk to complete and stamp the special VAT Refund form you must present at the VAT counter at the airport prior to boarding your flight. Receipts must also be presented with the unused/unworn goods to the clerks at one of the designated VAT Refund counters. Items must be in their original packaging. The refund will be returned in the unit of currency requested. Conditions do apply.