Electric and hybrid vehicles to get tax breaks, ministry announces

Measures intended to encourage purchase of green cars

By Asher Zeiger 29 April 2012, 5:32 pm

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A Better Place Renault Fluence ZE vehicle in Tel Aviv in 2012. (photo credit: CC-BY btrplc, Flickr)

In a move designed to jump-start the adoption of hybrid and electric vehicles by the local market, the treasury will offer tax benefits to buyers who purchase these vehicles, according to a Finance Ministry press release issued on Sunday.

The announcement is in keeping with the ministry’s Green Tax policy, in which benefits are offered by the Tax Authority for environment-friendly cars while increasing the tax on non-fuel efficient vehicles.

According to the plan, which is to go into effect on June 1, the purchase tax for electric vehicles will drop from 10% to 8% for 2012-2013, while the tax on hybrid vehicles will remain 30% rather than increasing to 45% as originally planned.

Plug-in hybrid vehicles, which use rechargeable batteries and can be plugged into external electric sources, will be taxed 20% in 2013. The tax rate for these vehicles will increase annually until 2017, at which time they will be fully taxed.

Regular cars carry a purchase tax of 83%.