Knesset revokes measure that made more online purchases tax-exempt

By Ariela Karmel

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24 February 2026, 12:31 am

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Ariela Karmel is a political correspondent at The Times of Israel. She previously reported for Calcalist and Haaretz. She holds an MA in Middle Eastern and African History from Tel Aviv University and a BA in Political Science from the University of British Columbia.

Finance Minister Bezalel Smotrich heads a Religious Zionist party faction meeting at the Knesset in Jerusalem, February 23, 2026. (Yonatan Sindel/ Flash90)

A measure that would have made it cheaper for Israelis to order goods online from abroad was revoked in the Knesset by a vote of 59 to 25.

The order from Finance Minister Bezalel Smotrich let Israelis buy up to $150 of personal goods from overseas, including from popular sites like Amazon and Temu, without incurring an additional 18% value-added tax. The previous limit was $75.

Since the order went into effect on December 24, it has been hailed by the general public but drawn sharp condemnation from local business owners who argued it would hobble their sales. They succeeded in garnering support from other members of the coalition, in particular from Prime Minister Benjamin Netanyahu’s ruling Likud party.

It’s highly unusual for the Knesset to overrule ministerial orders. But Knesset Finance Committee chair Hanoch Milwidsky, Economy Minister Nir Barkat, and MK Eli Dalal, all from Likud, are among those who have strongly opposed the bill, accusing the measure of subsidizing foreign companies at the expense of local industry.

“This activity is a death sentence for the business sector,” says Dallal, referring to the tax exemption order. He says Israel’s high cost of living derives from housing, rental and food prices, which he says “unfortunately weren’t addressed over the last three years.”

Netanyahu had reportedly sought to invoke coalition discipline to ensure the measure was upheld, but later reneged and allowed lawmakers to vote as they chose.

The vote follows a heated, marathon session during which lawmakers addressed the plenum to express support or opposition for the order. Negev and Galilee Minister Yitzhak Waserlauf held an extensive filibuster as negotiations continued behind the scenes.

Protesters in the gallery representing small businesses opposing the order were escorted out by security during a speech by Smotrich.

Smotrich vows to issue a new order following the revocation, saying he is “determined to lower the cost of living.”