Israel Plans Vape Tax and Licensing Reform for 2026
Israel’s Finance Ministry has proposed a 2026 economic reform introducing new taxes and licensing for vapes. The plan would impose a NIS 1-per-ml tax on vape liquids and NIS 30 per device, abolish VAT exemptions in Eilat, and is expected to generate about NIS 500 million (US$154 million) annually.
Key Points
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The Israeli Ministry of Finance plans to impose a tax of 1 shekel (US$0.3) per ml of vape liquid and 30 shekels (US$9) per vape device.
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The policy aims to reduce vaping among teenagers and combat black market trading.
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The VAT exemption for vapes in Eilat will be removed.
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Importers, manufacturers, and retailers will need permits from the tax authority and must establish a digital reporting system.
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The reform is expected to generate approximately 500 million shekels (US$154 million) in additional annual revenue.
Comprehensive Vape Reform Under the 2026 Arrangements Law
Nov. 10, 2025. According to Calcalist, Israel’s Ministry of Finance has proposed a comprehensive reform on the taxation and regulation of vape products under the 2026 Arrangements Law (Hok HaHesderim), aiming to curb vaping rates—especially among youth—and limit the black market.
Reform Framework: Taxation, Licensing, and Oversight
The reform, based on recommendations from a professional committee within the Israel Tax Authority, combines taxation, licensing, and oversight across the entire supply chain from importers to retailers.
According to ministry estimates, the reform would yield about NIS 500 million (US$154 million) in annual revenue for the state.
Proposed Tax Structure
Under the proposal:
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A specific excise tax of NIS 1 (US$0.3) per millilitre of vape liquid would be imposed, aligned with OECD averages.
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A NIS 30 (US$9) tax per vaporizing device, filled or empty, would apply.
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The current VAT exemption for vapes in Eilat would be abolished.
Licensing and Reporting Requirements
The plan also mandates registration with the Tax Authority for all entities involved in the production and sale of vaping products—including importers, manufacturers, wholesalers, and retailers.
Companies would be required to report operations digitally and trade only with registered entities.
Manufacturer Obligations
Manufacturers must obtain a production license similar to tobacco-product requirements, provide financial guarantees, implement computerized monitoring systems, and submit monthly production and inventory reports.
Goals and International Alignment
According to the Finance Ministry, the reform will align Israel’s vaping regulations with international standards, strengthen tax compliance, and reduce youth exposure to nicotine products.
