Lapid to expand zero VAT to Tama 38 projects

Minister of Finance Yair Lapid proposed today amending the zero VAT bill to include residential projects under National Outline Plan 38 or Tama 38 (earthquake retrofitting). The amendment appears in a draft of the bill published today for public comments. Lapid accepted a recommendation by the Israel Tax Authority and Israel Builders Association to include National Outline Plan 38 projects in the zero VAT plan. "The change will allow service providers in these areas to deduct the inputs tax in invoices issued to them for retrofitting services, thereby increasing the worthwhileness of these projects," said the Tax Authority.

The Tama 38 plan, first introduced in 2005, allows building owners to strike deals with contractors to give them additional building rights in exchange for reinforcing older buildings against earthquakes. The Pinui Binui program creates a framework for tenants of older buildings to be rehoused while their homes are demolished and rebuilt, with the contractor receiving building rights for apartments he can sell. Under the new proposal, work done under either plans would benefit from exemption from the 18% VAT either for construction or demolition work.

Earthquake retrofit regulation to accelerate renovation

It will now be possible to add 2.5 additional floors to buildings as part of National Outline Plan 38 or Tama 38 (allowing retrofitting of existing structures to make them earthquake-proof in exchange for additional building rights), after the ministerial committee for internal affairs and services today approved the third amendment to the plan. The National Planning and Building Commission approved the amendment three weeks ago.

Under the amendment, it will be possible to add up to 2.5 floors to existing buildings retrofitted to withstand earthquakes, and obtain building rights to another lot in exchange for the retrofit. The amendment originally allowed the addition of 2.5 floors to buildings in poor areas only, and 1.5 floors in wealthy neighborhoods. But following the recommendation of the investigator who heard the objections to the amendment, the government decided to apply the new rules uniformly nationwide.

The Ministry of Interior says that the amendment will further encourage the renovation of old buildings.

Source Globes