The State of Israel The Tax Authority in Israel Customers ...€¦ · Part 13.1 – General ......

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16.11.15 Customers Folder (Foreign Trade) - Procedure for a conditional exemption Appendix 13/B

The State of Israel

The Tax Authority in Israel

Customers Folder (Foreign Trade)

Chapter 13 – Procedure for a conditional exemption

Jerusalem, 4th of Kislev 5776 (16.11.2015)

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Chapter 13 – Procedure for a conditional exemption

Contents

Part 13.1 – General directives 5 1. Contents of the chapter 5 2. Documents 5 3. Definitions 6 Part 13.2 – Importation of goods under a conditional exemption 7 1. The opening of a computerized customs exemption file 7 2. The monitoring of the use of goods 7 3. An importer making a non-recurring release of goods 7 4. Approval from a government ministry as a condition for the release of goods 8 5. Proof of entitlement before the release of goods 8 6. Conditional Exemptions Units 8 Part 13.3 – Release of goods that have been classified in an item as conditional or with a conditional discount code

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1. Contents of the part 8 2. The submission of an import declaration with goods on conditional exemption terms 9 3. The retrospective correction of a declaration with goods on conditional exemption terms 9 4. The handling of an importer who releases goods with a conditional exemption framework 10 5. Guarantee arrangement 10 6. Adjustment of declarations and the return of guarantees 12 7. The institution of steps in respect of the non-compliance with conditions 12 8. Hotels and guest houses 13 9. Exemption in accordance with the Oil Law – 1952, and discount code 9 13 10. Approval of an exemption for international aid agencies under discount code 17 14 11. Importation of alcohol and the release thereof within the framework of conditional items 15 12. Alcohol in a local purchase 16 13. Release of goods in accordance under the terms of a customs exemption by the customers unit in the

Ministry of Defense (MOD) 17

14. Release of photography and telecommunications equipment by members of the foreign press 18 15. The importation of goods under a customs exemption by nursing and health institutions 20 Part 13.4 – Reporting, audit and proof of use 24 1. Contents of the part 24 2. Permanent equipment 24 3. Spare parts for permanent equipment 25 4. Raw materials 25 5. Goods that have been taken out of all use 25 6. Reporting on the use of goods 25 7. Declaration by an importer 25 8. Audit 25 9. Monitoring of proof of the use of the goods 26 10. Physical audit of the proof of use in hotels, and in branches of institutions and companies, which are part of

a national network 27

Part 13.5 – Temporary importation 27 1. Contents of the part 27 2. General 27 3. Goods that are designated for exhibitions and for similar events 28 4. Leaving goods in Israel 28

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Part 13.6 – Closure of the monitoring of goods that have been released under an exemption - conditional 28 1. Content of the part 28 2. Closure – monitoring 28 3. The transfer of goods and/or a change in their designation 29 4. The destruction of goods, which have been released under the terms of a conditional exemption 29 5. Closure – monitoring in respect of the theft of goods/ a vehicle 29 6. Updating of closure – monitoring in a system 30 Part 13.7 – Payment of the taxes 30 1. Content of the part 30 2. Payment of taxes in respect of goods that are imported under a temporary importation and which have been

classified with a conditional exemption 30

3. Assessment and the payment of taxes in respect of goods that have ceased to be used for the objectives of the conditional exemption

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4. Correction of an import declaration with goods on customs-exemption terms – the calculation of taxes, the extension of the period

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5. Plants that are the subject of a stay of proceedings, which are in liquidation or receivership, and importers who are the subject of bankruptcy proceedings

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6. Charges with taxation – the importation of residue and waste from raw materials that have been released under a conditional exemption

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7. The transfer of used goods from hotels to institutions for humanitarian objectives 32 Part 13.8 – system reports 33 Part 13.9 – Directives for the handling of conditional exemption tasks 36 Appendix 13/A – Application for importing under a conditional exemption (Customs form 370) 38 Appendix 13/B – List of the international aid organizations that are entitled to an exemption from taxes in accordance with discount code 17 in the Customs Tariff

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Appendix 13/C – Office holders in the Ministry of Welfare, who have been approved to sign on an exemption for international organizations (which are detailed in Appendix 13/B). (Section 13.3.10.C).

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Appendix 13/D – Procedures for recording and reporting (hotels) 42 Appendix 13/D-1 – To the procedure for recording and reporting (hotels) 44 Appendix 13/D-2 – To the procedure for recording and reporting (hotels) 45 Appendix 13/E – Procedure for recording and reporting (Institutions) Appendix 13/E-1 – Procedures for recording and reporting (Institutions) Appendix 13/E-2 – Procedures for recording and reporting (Institutions) Appendix 13/F – Procedures for recording and reporting (plants) 46 Appendix 13/F-1 – Procedures for recording and reporting (plants) 49 Appendix 13/F-2 – Procedures for recording and reporting (plants)

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Appendix 13/F-3 – Procedures for recording and reporting (plants) Appendix 13/F-4 – Procedures for recording and reporting (plants) Appendix 13/G – Autonomous letter of commitment to indemnify (third party) (Customs Form 151A) 50 Appendix 13/H – Independent letter of commitment (Customs form 151B) 51 Appendix 13/I – Application for an exemption on local purchases (Customs Form 374) 52 Appendix 13/J – Approval for the customs authority regarding the fulfillment of the terms for the customs item (Customs Form 381)

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Appendix 13/K – Request for exemptions from customs/ from purchase tax on goods that have been imported for consumption in Israel (Customs Form 425)

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Appendix 13/L – Commitment (conditional exemption) (Customs Form 373) 55 Appendix 13/M – Request for approval for the transfer of used goods from a hotel to a public institution with welfare and aid objectives (Customs Form 371)

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Part 13.1 – General directives

1. Contents of the chapter

A. The directives on the release of goods which are classified as conditional items or which have conditional discount codes, which are mentioned in the Customs Tariff are concentrated in this chapter, in addition to which the following issues are detailed:

1) The monitoring of these goods in the computer system.

2) Release under conditional exemption conditions and the receipt of guarantees.

3) Reporting and proof of use.

4) Temporary importation.

5) The closure of the monitoring of goods that have been released under a conditional exemption.

6) The calculation of taxes and the creation of payment instructions.

7) Conditional exemption on local purchases.

B. This chapter does not apply to the importation of goods under a conditional exemption in the following circumstances.

1) The Importation of goods within the framework of discount codes 3, 4 and 7 of the Customs Tariff in the personal importation procedure and in the diplomats procedure.

2) The importation of motor vehicles (taxis, ambulances and etc.) pursuant to conditional discount codes within the context of item 87.03 in the Customs Tariff, which is arranged in the vehicles procedure.

C. The role of the Conditional Exemptions Unit is to determine an importer's entitlement to release foods under a conditional exemption and to verify that goods that have been released under such exemption conditions, are used in accordance with the conditions that have been determined in the conditional item or in the conditional discount code.

D. The conditional exemption system is intended for use as a Supervisory and control tool by the local Conditional Exemptions Units in customs offices: Haifa, the Center and Jerusalem.

These issued are to be handled in the units:

1) The opening of conditional exemption files.

2) Monitoring of import declarations that include goods that have been released under conditional exemption terms.

3) Proof of use.

4) Determining a credit ceiling and updating the level of the guarantees.

5) Handling importers.

6) Closing monitoring.

2. Documents

A. The documentation for the release of goods, which are classified as conditional items or are under a conditional code, are inter alia:

1) The Customs Ordinance.

2) The Purchase Law (Goods and services), 1952.

3) The Customer Law, Excise and Purchase Tax Law (Cancellation of a special exemption) – 1957

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4) The Oil Law – 1952

5) The Customs Tariff and Exemptions and Purchase Tax on Goods Order, as published from time to time in the Official Gazette (hereinafter: the Customs Tariff). Purchase Tax Order (exemption) – 1975.

6) Purchase Tax Exemption Order.

7) The Value Added Tax Law – 1976.

8) The Value Added Tax Regulations – 1976.

9) The Taxes Law (Arrears fines) – 1980.

B. The classification of goods, under conditional items and conditional discount codes is to be in accordance with the documentation mentioned in Paragraph A above, the provisions of this procedure and the classification directives relating to those items

3. Definitions

In this chapter, the following are to be interpreted as:

"Management" - The management of the Taxes Authority in Israel.

"Transfer of ownership" - The transfer of ownership prior to the release of goods from customs supervision, pursuant to sections 39A Of the Customs Ordinance, Section 9B of the Purchase Tax Law (goods and services) – 1952, and Section 20 of the Value Added Tax Law -1975.

"Import declaration" - Declaration for the release of goods for consumption in Israel.

"Temporary importation"

- Goods that will be imported for a particular purpose, which are intended to be re-exported within the time period that has been set.

"Letter of commitment" - An autonomous letter of commitment for indemnification (third party) (Customs Form 151A) (Self) (Form 151B).

"Supervisor" - The Supervisor in charge of the Conditional Exemptions Unit in the customs office.

"Director" - The Director of the Taxes Authority in Israel or whoever has been empowered by him.

"System" - The computerized conditional exemption system in the global gate.

"MOD" - The Ministry of Defense.

"Appendix to the tariff" - Items found outside the framework of Chapters 1 to 99 of the first addition to the Customs Tariff.

"Conditional exemption" (hereinafter- CE)

- Exemption (full or partial) from the payment of import taxes, which is given for goods that are released under a conditional exemption or a conditional exemption code in the Customs Tariff, except for an exemption given in personal importation.

"Item" - Including a sub-item and a section in the Customs Tariff.

"Significant item" - An item that is located within the framework of Chapters 1 to 99 of the first addition to the Customs Tariff, in which the goods could have been classified were it not for classification as a conditional item.

"Conditional item" - An item in the Customs Tariff, which is in column B where the word "conditional" appears beside the description of the goods.

Authority - The Taxes Authority in Israel.

Part 13.2 – Importation of goods under a conditional exemption

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1. The opening of a computerized customs exemption file

A. An importer requesting to release goods under conditional exemption terms is to refer to the Conditional Exemptions Unit in the area in which its business is managed by means of an initial letter of request detailing its request, which is to be transmitted to the unit in an electronic file on Customs form 370 – "Application

for importing under a conditional exemption" (see Appendix A) and a pro-forma account relating to the relevant goods. A file that has been approved and opened in the system will be in effect and solely that the first release pursuant to it has been executed under CE conditions within 6 months of the day on which it is opened.

If no such release has been executed, the file is to be closed automatically and if necessary, the importer will need to submit a new application to open a file.

B. The Conditional Exemptions Unit is to check the prima-facie reasonability of the application, is to make an arrangement with the importer regarding the depositing of appropriate guarantees (as detailed in Section 13,3,5 below) and is to input the importers details in the "handling of a CE importer" system. A clerk in the unit is also to input the significant items and the conditional items or those with a conditional code that have been approved for the importer into the system. If necessary, the clerk is also to input the maximal quantity and/or value that is permitted to be released under CE terms, and furthermore, in cases of a temporary import, they are to input the period of the approval for the goods to remain in Israel pursuant to the approval that has been given by the CE Supervisor. The Conditional Exemptions Unit is to open a file for the importer for filing documents and reports.

C. If a guarantee’s depositing arrangement has been made with the importer, the type of the guarantee and its percentage of the value of the goods, as detailed in Section 5 of chapter 13.3 below is to be input by a clerk in the unit.

D. It is possible to show a list of guarantees that the importer has deposited and the degree to which they have been "utilized" for the purpose of releasing goods in the CE system.

2. The monitoring of the use of goods

Monitoring in the system starts immediately upon the allowance of the import declaration in release process, and its purpose is to verify that the goods have been used in accordance with the terms of the exemption. The monitoring in the system is performed at the level of the customs items.

A clerk in the Conditional Exemptions Unit is to perform initiated monitoring of monitoring following the receipt of a report from the importer. In order to perform monitoring, a clerk in the unit is to produce a list of CE records in the system (the entry and the customs item create a CE record, according to various cut-offs, such as: a CE list by date, a CE list by import declaration, or a CE list by importers.

A clerk in the unit is to input the type of the CE and the date of the permit, from which he requests to conduct monitoring of conditional exemption applications.

A clerk in the unit is to receive a list of CE records sorted by date, where for each record the proof of use status is to be noted.

3. An importer making a non-recurring release of goods

For an importer which releases goods under conditional exemption terms on a one-off basis and where "proof of use" has been prepared for the said goods in accordance with the terms of the exemption, the Supervisor is to update the importer's status in the system to "non-CE importer" which is in order to prevent such an importer to release additional goods within the framework of the conditional exemption, in an uncontrolled manner.

4. Approval from a government ministry as a condition for the release of goods

A. For conditional items or items with a conditional discount code in the Customs Tariff, which require confirmation from a government ministry on compliance with the conditions, this confirmation is to be

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furnished on customs form 381 – "Confirmation to the Customs Authority regarding fulfillment of the conditions for the customs items (see Appendix J).

B. The confirmation is to be attached to the import declaration by the customs agent.

5. Proof of entitlement before the release of goods

Goods is to only be released under a conditional item for an importer who has proven their entitlement to an exemption, before their release from customs supervision. This is without detracting from the importer's duty also to prove the compliance with the terms of the exemption after the release of the goods.

6. Conditional Exemptions Units

A. The customs offices that are detailed below, operate a Conditional Exemptions Unit:

Haifa Customs Office

- The area handled covers the entire North of the country down to the Southern boundary of the Hadera regional customs and VAT office (including the Israeli settlements in Northern Samaria). This customs office also handles purchases of alcohol nationally.

Central Region Customs Office

- The area handled is from the Northern boundary of the Netanya customs and VAT office, and South to Eilat (including the Israeli Settlements in Western Samaria). This customs office also handles files relating to codes 9 and 621 nationally.

Jerusalem Customs Office

- The area handled includes the Jerusalem corridor, the Israeli settlements in central Samaria, the Jordan valley and the Judean hills. Furthermore, this customs office handled files relating to discount code 17 nationally.

B. Applications for the opening of a CE file are channeled automatically by the system to one of the customs offices, as detailed in section A, according to the address of the applicant's business.

C. The release of goods under conditional exemption conditions to importers who are resident in the Palestinian Authority (hereinafter – PA), or to corporations that are registered in the PA – is to be performed against approval in advance from the Director of the Autonomy field in the management, who is given in reliance on an appropriate confirmation from the PA's Director of Customs. The inputting of the importer's details in the CE system is to be done in the Central Region Customs Officer pursuant to the directives issued by the Director of the Autonomy field in the management.

Control over the use of these goods is at the exclusive responsibility of the PA Customs.

Part 13.3 - Release of goods that have been classified in an item as conditional or with a conditional discount code

1. Contents of the part

A. This part includes guidance regarding the release of goods classified as conditional items or under a conditional discount code, as well as provisions regarding the depositing of guarantees, the supervision of goods and movement thereof, and the records to be maintained in this connection.

B. The conditional exemption provisions also apply to goods that are released under a conditional exemption (full or partial) from purchase tax alone.

2. The submission of an import declaration with goods on conditional exemption terms

A. Pursuant to Section 6(A) of the Customs Tariff Order, goods are not to be classified under a conditional item classification or with a conditional discount code unless an import declaration has been submitted for them before their release, which includes goods under conditional exemption conditions.

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B. An import declaration, which includes goods under CE conditions is also to be used for the release of goods under a conditional item or with a conditional discount code, even where the conditional exemption relates solely to purchase tax.

C. Stringent attention is to be paid when inputting the declaration data, to mention the conditional item, the conditional discount code and the significant appropriate items in the Customs Tariff, and the value in foreign currency of each significant item; furthermore, stringent attention is to be paid to performance of the provisions covering the inputting of an import declaration.

D. In the case of the release of goods under a guarantees, the amount of the guarantee (which has been deposited to collateralize the legal use of the goods that have been released under a conditional item), is to be calculated based on the taxes that would apply, were the goods to be classified as a significant item without a discount code.

E. In any case in which goods are released under conditional exemption terms, the importer number of the importer that is entitled to an exemption and their name are to be recorded in the import declaration and in the bank guarantee.

What is stated above will also reply in respect of the transfer of the ownership of the goods, before they are released from customs' supervision.

F. In every CE declaration, which is directed to the compulsory line in the release process, stringent attention is to be paid to checking compliance with the pre-conditions that are detailed for the conditional item or the conditional discount code.

3. The retrospective correction of a declaration with goods on CE terms

A. Despite what is stated in paragraph 2.A. above, pursuant to Section 6(B) of the Customs Tariff, it is possible to correct a regular import declaration and to turn it retrospectively into a declaration that includes goods under CE terms, under the following conditions:

1) It has been proven that all of the conditions for the conditional item or the conditional discount code have been met in the goods, as from the time at which the import declaration was accepted.

2) The application for the correction of the declaration as submitted to an authorized clerk in the customs office within 3 months of the release of the goods.

In special cases, the Director is entitled to extend this period to up to 6 months from the time of the release. It is not possible to correct a declaration to CE after the end of those six months.

B. The adjustment is to be performed as follows:

1) Consultation in advance to check entitlement to release under CE terms.

2) After the receipt of confirmation from the relevant CE unit, computerized approval is to be received for the correction of the import declaration accordingly.

C. It the application has been submitted to the customs office after the end of a period of 3 months from the release of the foods but before the end of a period of 6 months from that date, there is justification for the connection of the classification of the goods in a declaration to a conditional item or to a conditional discount code, the application is to be passed to the Director of the conditional exemption field in the management with the attachment of the Supervisor's recommendation, for the purpose of receiving the Director's approval for the correction of the declaration, as aforesaid.

D. The correction of the declaration is to be performed in the transaction file module.

4. The handling of an importer who releases goods with a conditional exemption framework

A. An importing releasing goods under conditional exemption terms, will be required to open a file in the regional Conditional Exemptions Unit and to make an arrangement regarding the depositing of a guarantee.

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If necessary, a clerk in the unit is to update the data in the system regarding a CE importer, such as: the regional CE unit in which the importer's file is maintained, the type of CE importer (hotel, institution or other), the CE status (active, dormant, restricted).

B. (The procedure on the opening of a file for a new importer, including the checking of the importer's profile) or by means of a physical audit.

C. The Supervisor is to explain to an importer who is releasing goods for the first time under conditional exemption terms, their duty to act in accordance with the customs laws and its procedures, and in accordance with the provisions relating to the legality of the importation. The Supervisor is to refer the importer to this procedure, whilst placing a special emphasis on chapter 13.4 below.

D. As stated in Section 1 of Chapter 13.2, the importer is to fill in Form 370, which is to be approved by the authorized person in the authority. This form is to be filed as foundation document in the importer's CE file in the CE unit as well as in the virtual file that is not in the system.

E. The significant items, the conditional exemption items and the conditional discount codes that have been approved in Form 370, are to be input by a clerk in the unit into the system and no change is to be made in an item in the system without Form 370 having been amended and approved prior to this.

F. The data in Form 370 are to be updated once every 3 years or in a case in which the importer gives notification of a change in the data on the form if earlier. The importer is to announce a change in the data on the form within 14 days of the day on which a change occurs.

G. At the Supervisor's discretion, an audit is to be conducted from time to time in respect of those importers at which changes have occurred, which require the amendment of the Form 370, in accordance with information that has been received,

5. Guarantee arrangement

A. Pursuant to Section 31 of the Customs Ordinance and Section 6(D) of the Customs Tariff, guarantees are to be demanded as detailed below, as collateral for compliance with the terms of the conditional exemption.

B. For the purpose of releasing goods within the framework of a conditional exemption, the party entitled to the exemption is to deposit guarantees, as detailed below:

1) In a temporary importation – the release of the goods is to be done against the depositing of a bank guarantee at a rate of 100% of the amount of the import taxes.

In a temporary/ permanent import of motor vehicles or other goods with high taxation – in addition to the depositing of the bank guarantee, the importer is to insure the goods against theft, including the tax that applies and to furnish a copy of the relevant insurance policy to the CE unit.

2) In the importation of goods someone that is entitled, who is an importer or the owner of a business – the goods that they will be importing are to be released against the depositing of a bank guarantee at a rate of 25% of the amount of the import taxes.

3) In cases in which the person who is entitled releases a number of shipments in the course of the year, the suggest to the person who is entitled that they deposit a global bank guarantee at a rate of 10% of the amount of the import taxes that apply on the annual scope of the imports, in accordance with a person by the person who is entitled in respect of the expected imports, which is submitted at the time of the making of the arrangement. The period of this guarantee is for one year from the day on which it is deposited.

4) a. For the purpose of making a guarantee arrangement, the importer is to furnish a letter of commitment on Customs Form 151A – "Autonomous letter of commitment to indemnify (third party)" (see Appendix G), which is to be deposited in addition to the bank guarantees (if required), The letter of commitment is to be signed by whoever is authorized to sign in the importer's name and that of the persons making the commitment.

b. (The procedure on the opening of a file for a new importer, including the checking of the importer's profile) or by means of a physical audit.

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5) Goods, which are imported by the entitled bodies, as detailed below, are to be released against the depositing of a self-commitment, signed by someone who authorized to sign in the entitled party's name on Customs Form 151B – "Self-letter of commitment for approved institutions" (see Appendix H).

a. An institution of higher education, which is recognized by the Director of the Ministry of Education and Culture (Council for Higher Education).

b. Museums that are recognized by the Ministry of Science and Technology.

c. Government institutions, medical institutions, diplomatic representatives and government companies.

6) A body that is entitled to an exemption, which is a hotel, an oil company or an aviation company, will have the goods released against the depositing of a letter of commitment, which is signed by someone who is authorized to sign in its name and a third party, who in the Supervisor's judgment is entitled to sign on a commitment in the name of the entitled party (on Customs Form 151A).

7) The Customs Authority is entitled to receive a guarantee from an insurance company instead of a bank guarantee (see the example in the appendix).

8) A guarantee is not to be received from a customs agent as an alternative to a bank guarantee or a letter of commitment that are detailed above.

9) A body that is entitled to an exemption that does not deposit a letter of commitment as required, is to be required to deposit a bank guarantee at a rate of 100% of the amount of the import taxes.

10) A body that is entitled to an exemption that does not deposit a self-commitment as required is to be required to deposit a letter of commitment or a bank guarantee.

11) When setting an arrangement, a CE clerk is to define the percentage of the guarantee that is required in the system, as well as the period that is required for the guarantee and the terms for its return.

C. After the setting of the guarantee arrangement, the importer is to furnish the guarantee to the Claims, Deposits and Deficits Department ("CDD")/ the Guarantees Department in the customs office, which will enter the details of the guarantee into the system. The CDD department will handle the filing of the guarantee, be responsible for monitoring, extension, return, exercise and etcetera.

D. In the event of the depositing of a letter of commitment, the credit ceiling must be noted, as follows:

1) If this is the only guarantee – mark: 999999.

2) If this is a supplementary guarantee to a bank guarantee, note the credit ceiling, which will be identical to the credit ceiling for the bank guarantee.

E. The system checks the existence of guarantees in every declaration that relates to a conditional exemption, which requires this. Within this context, the system monitors the "utilization" of the guarantees that have been deposited by CE importers.

If the amount of the tax that would apply to the goods in accordance with the classification of the significant item exceeds the balance of the unexploited credit ceiling for the guarantee, the declaration will not be permitted. In this case, the importer must refer to the regional CE unit, in order to increase the amount of the guarantee, or prove the legal use of the goods that have been released in the past under CE terms in accordance with that same guarantee, which it has already deposited.

F. In any event, a clerk in the CE unit or an assessor in the release process can view the guarantee that has been deposits in respect of each specific declaration or the list of the guarantees that have been deposited by the importer on the computer.

G. An importer from the Palestinian Authority (PA), for which confirmation has been received through the management that it has deposited a guarantee with the PA customs, will be required to deposit an additional guarantee in an Israeli customs office for the purpose of opening a CE file.

6. Adjustment of declarations and the return of guarantees

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A. The adjustment of the entries and the return of the guarantees is to be done in reliance on: reports, confirmations from accountants, audits in plants, in institutions, in hotels, all of which is to be in accordance with the Supervisor's exercise of judgment. In special cases, the Supervisor is entitled to waive such an audit, and solely that the reasoning for this is to be recorded.

B. The timing of the use of the goods:

1) The person entitled is to start to use the goods, for the objective of which it is entitled to a conditional exemption, within one year from the date of the release of the goods from the customs.

The Customs Collector (or whoever is empowered by him) is entitled to defer the start of the use to a later time.

2) If reasonable residual amounts of equipment and materials remain, which are held by the plant for the purpose of usage, the guarantees will be reduced proportionately, at the plant's request.

C. At the end of the proof of use processes (as detailed in Chapter 13.4 below), the Supervisor is to give instructions for the return of the bank guarantees, which have been deposited for the said goods, to the person entitled.

7. The institution of steps in respect of the non-compliance with conditions

A. If the person entitled has not submitted the periodic reports, or confirmation from an accountant or proof of export, or any other confirmation that may be required from them, at the timings that were set in an arrangement, a clerk in the Conditional Exemptions Unit is to produce an appropriate computerized reminder letter and is to send it to the importer by registered mail.

B. If no reports have been received, or of no reasonable explanation has been provided, to the Supervisor's satisfaction, within 35 days from the date denoted in the reminder letter, the Supervisor is to act as follows:

1) They are to update the relevant import declaration and to produce notifications of a charge for the importer.

2) If the taxes have not been paid in accordance with the notifications of a charge, they are to take action to forfeit the bank guarantees.

3) Any amount that is due to the Authority in excess of the amount of the guarantees that have been forfeited, is to be collected by means of the legal measures that the State possesses.

4) If the importer is left owing taxes, and there is difficulty collecting them, the Collector is to take action against the importer under Section 4 of the Indirect Taxes Law.

5) If all of the taxes that apply pursuant to paragraphs 1) and 2) above, the goods that arrived afterwards will be released against the depositing of bank guarantees at the level of the full amount of the taxes that apply.

C. If it has been discovered that a violation has been committed with goods that have been released under CE terms, the importer's status is to be updated in the system to "Non-CE importer" (in addition to the collection of the taxes that apply as detailed above), in order to prevent his from releasing additional goods under a conditional exemption, without depositing a bank guarantee at the level of the full amount of the taxes that apply.

In addition to this, the Customs Collector is to consider instituting legal steps against the importer, in accordance with the severity of the violation.

8. Hotels and guest houses

A. A conditional exemption for hotels and guest houses is anchored in discount code 820 of the Customs Tariff.

B. The Supervisor is to check whether a hotel (which is requesting to release goods under discount code 820) is in compliance with the terms of the conditional exemption and is on the list of the hotels that are entitled to an exemption, pursuant to a confirmation from the Ministry of Tourism, which has been received from the Supervisor in the management. On the first of January in each year, a clerk in the unit is to update the

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importer's status to "Non C.E. importer" in the system. The status is to be updated back to "C.E. importer" after the receipt of confirmation from the Ministry of Tourism via the Supervisor in the Management in respect of the current year.

C. The exemption is to be given for a quantity of goods, which may not exceed the quantity that has been approved as necessary for the purpose of the maintenance of the hotel.

The CE unit's approval in respect the quantity that has been approved, mentioning the name of the person approving, is to be input into the system on Customs Form 370, in the hotel's virtual CE file.

The reconciliation of the quantity that is released to the quantity that has been approved is to be checked by the regional CE unit when an audit is conducted in the hotel.

9. Exemption in accordance with the Oil Law – 1952, and discount code 9

A. For the purposes of this section wherever the word "oil" appears, the intention is including gas.

B. The owner of an oil right (the holder of an early license, holding or permit from the Commissioner of Oil), and an oil works contractor (whoever the Minister of Infrastructures has confirmed that they are performing activities for oil purposes in accordance with a commission from the owner of an oil right) (hereinafter – the owner of an oil right), is entitled to import all of the plant, the equipment, the instillations, the fuel, the houses, the haulage system, and etcetera, which are required by them for oil purposes, including a field vehicle other than a private motor vehicle and except for consumer products, under an exemption from customs and purchase tax.

C. A pre-condition for the opening of a CE file under discount code 9 is confirmation from the Commissioner of Oil that a particular company is the owner of an oil right as aforesaid, and in respect of an oil works contractor, confirmation is also required from the Minister of Infrastructure, as aforesaid.

D. Goods that are imported directly by the holder of a right or by means of an agent are exempt from the payment of customs and purchase tax, if the holder of the right has a recommendation from the Commissioner of Oil Affairs in the Ministry of National Infrastructure (or from, whoever has been empowered for this purpose).

The recommendation is to be in the form of a stamp, which has been stamped on the related import documents.

The following is an example for a recommendation:

I recommend the granting of an exemption from customs pursuant to Section 46A of the Oil Law, 1951

Date Director of the Oil Unit

E. If goods have been imported through an agent, they will be released in the name of the holder of the right pursuant to the Oil Law, after the transfer of ownership over them, to the holder of the right

F. The holder of an oil right that imports goods under discount code 9, may not transfer the goods afterwards, except after having submitted an application on this to the Conditional Exemptions Unit and after having paid the taxes that apply to the goods in accordance with the classification in the significant customs item.

The transfer of goods, as aforesaid, from one holder of an oil right to another holder of an oil right is exempt from the payment of taxes, and solely that the application for transferring has been approved by the Commissioner of Oil and by the Conditional Exemptions Unit.

G. A customs clerk is to release all of the goods (except for a vehicle), for which a recommendation has been given by the Commissioner of Oil Affairs in the Ministry of National Infrastructures.

If the clerk has found that the recommendation has been given for goods, which in his opinion are consumer products, he is not to approve the application for an exemption.

H. The exemption is to be given for appropriate motor vehicles for movement in the field alone (a jeep or field vehicle), against a declaration by the holder of the right pursuant to the Oil Law, where the vehicles is to be

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used solely and exclusively by professional staff who are engaged in work in the field, and solely for the purposes that are detailed in section 44 of the Oil Law, as oil objectives and including exploration for oil and the construction of oil pipelines.

I. The holder of the exemption is to maintain a monitoring card for the journeys by each vehicle that has been released under an exemption.

10. Approval of an exemption for international aid agencies under discount code 17

A. The procedure for the approval of an exemption for international aid agencies (a list of the organizations is set forth in Appendix B) is set forth in this section. The said international aid agencies are entitled to an exemption from the payment of customs and purchase tax on imported goods, as aforesaid, under discount code 17 as well as to an exemption from the payment of purchase tax on the purchase of local products. In respect of VAT, these bodies are entitled to the administrative coverage of this tax, as will be detailed below.

B. The monitoring and the handling of a conditional exemption for international aid agencies under discount code 17 will be conducted in the CE unit in the Jerusalem customs office.

C. The conditions for the release of goods under discount code 17 in the Customs Tariff are:

1) The organizations have recognized by the Director General of the Ministry of Welfare, the Ministry of Finance and the Ministry of Defense, for the purpose of the release of imported goods, or local purchases.

2) The goods are intended for the operations of the organizations in Israel alone (except for goods that have been released by the Red Cross Organization and which are intended for use in the Palestinian Authority), the quantity of the goods has been approved before the import or the local purchase by the person empowered for that purpose in the Ministry of Welfare.

D. The release of imported goods

1) In order to release imported goods under a conditional exemption, in addition to the regular release documents, the organization is also to submit Customs Form 425 – "Application for exemptions from customs/ purchase tax on goods that are imported for consumption in Israel" (see Appendix K), which has been approved by the authorized person.

The signatures of the authorized persons are to appear in the designated place for signature by the Conditional Exemptions Unit, beside which the stamp of the Ministry of Welfare is to be attached (the Conditional Exemptions Unit does not deal with pre-approval).

2) A copy of Customs Form 425 that has been approved, is to remain in the Ministry of Welfare for monitoring, the original of the approval is to be attached as an electronic attachment to the import declaration by the customs agent.

E. VAT on importing

Goods that have been approved for release under discount code 17, are not exempt from VAT.

Accordingly, the customs office is to ensure the coverage of the VAT by means of the Authority's financial controller.

F. Approval for the purchase of a vehicle

1) The replacement of a vehicle

a) The Ministry of Welfare is to approve the purchase of a vehicle (on Form 425), after it receives the documentation for the payment of taxes on the replacement vehicle or documentation for the importation of the vehicle from representatives of the organization and it is to verify that no exemption on another vehicle has been approved in respect of the vehicle.

The form that has been approved is to be passed to the Supervisor of the Conditional Exemptions Unit in the Jerusalem Customs Office, with the attachment of a memorandum that details the considerations for the granting of the approval.

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The form, which has been approved by the Supervisor of the CE Unit in the Jerusalem Customs Office, is to be returned to the organization's representative and will serve as documentation for the release of the vehicle from the relevant Customs Office.

b) After the release of the replacement vehicle, representatives of the organization are to furnish a photocopy of the license for the new vehicle to the Ministry of Welfare. An additional photocopy of it is to be passed by the Ministry of Welfare to the Conditional Exemptions Unit in the Jerusalem Customs Office.

c) The Ministry of Welfare and the Conditional Exemptions Unit in the Jerusalem Customs Office are (each separately) to maintain up to date records of the fleet of vehicles for each and every organization.

The motor vehicles in respect of which the taxes that apply or which have been removed are to be deleted from these lists and the new motor vehicles that have been released without the payment of taxes are to be added to them.

Once a year, the Ministry of Welfare is to pass the Customs Office in Jerusalem a list of the motor vehicles that have been purchased by each organization.

d) In the case of the theft of a vehicle, the organization is to pay the taxes that apply as a condition for the release of a new vehicle.

2) The purchase of an additional vehicle

Approval for the addition of a motor vehicle to the fleet of motor vehicles in the organization, is to be produced by the Ministry of Welfare on Form 425

G. Checks in respect of the use of goods-

The Conditional Exemptions Unit in the Customs Office in Jerusalem is to conduct sample checks regarding the use of the goods, in respect of which the exemption pursuant to this section has been approved.

11. Importation of alcohol and the release thereof within the framework of conditional items

A. It is possible to release alcohol under CE terms in accordance with customs items 22.07 and 22.08, beside which the word (conditional) is mentioned.

B. Since this is the release of goods within a conditional exemption framework, the party that is entitled to the exemption is to make an arrangement for the release of the alcohol, and to open a file in the Conditional Exemptions Unit in the region in which its business is conducted, and this is in addition to the fact that the party entitled has a file in the purchase tax unit. The party entitled is to furnish the CE unit with a valid manufacturer's license.

C. Those entitled to an exemption are to deposit guarantees as follows:

1) Hotels and institutions – a self-commitment.

2) Manufacturers of beverages and medical drugs – a bank guarantee at the level of 15% of the taxes that apply but not less than 10% in addition to a third-party guarantee.

D. Manufacturers of alcoholic drinks must furnish the CE unit with a valid manufacturer's license for alcohol beverages when opening a CE file. The importers of alcohol as well as the manufacturers of alcohol themselves are to submit a report, as is customary in respect of the use of raw materials, which have been released under a conditional exemption.

E. All of the provisions that apply to importers that are entitled to a conditional exemption for the matter of reporting, audit and proof of use (as detailed in chapter 13.4 below) – will apply to importers of alcohol, which are released under conditional exemption terms.

12. Alcohol in a local purchase

A. This section arranges the issue of the purchase of alcohol by those entitled who purchase alcohol under a conditional exemption for medical purposes and/or for the manufacture of alcoholic beverages and/or the

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production of vinegar and/or for other needs, pursuant to the conditions that are detailed in Customs items 22.07 and 22.08, from local suppliers of alcohol who are registered in the regional purchase tax offices.

B. Those entitled will be entitled to purchase alcohol from local suppliers within the framework of a conditional exemption under Customs items 22.07 and 22.08 on condition that they open a CE file in the Conditional Exemptions Unit in the Customs Office in Haifa.

For the purpose of opening a CE file, the entitled party (the final user of the alcohol) is to submit the documents that are detailed below to the Conditional Exemptions Unit in Haifa:

Form 374A – "Application for an exemption on local purchases – alcohol" which has been filled in pursuant to the law and including the details that are required. This form can be printed by mans of the Tax Authority's website on the internet.

Confirmations from the duly authorized authorities in accordance with the terms of the conditionally exempt item:

1) Manufacturers of alcoholic drinks – a copy of a valid license for the manufacture of alcoholic drinks, which has been issued by the relevant purchase tax unit is to be submitted.

2) Hospitals, sick funds, laboratories and manufacturers of drugs – appropriate confirmation from the Ministry of Health are to be submitted.

3) Research or educational institutions – confirmation from the Director General of the Council for Higher Education is to be submitted.

4)

5) Confirmation from an accounting confirming the maintenance of accounting records in accordance with the Income Tax directive and the VAT regulations, including an inventory of alcohol and inventory of finished goods account.

6) The product tree for the goods that are manufactured by the entitled party, which includes, inter alia, the manner in which the alcohol is used.

7) A routine report to the Conditional Exemptions Unit in Haifa on every purchase of alcohol from local suppliers within the framework of the conditional exemption items by means of an invoice/ pro forma account (for each purchase).

8) Confirmation of the approved signatories in the name of the corporation making the application.

9) Appropriate guarantees in accordance with section 12D below.

C. Parties that are entitled to an exemption are to deposit guarantees, as follows:

Hospitals and institutions - Are to submit a letter of self-commitment, Customs Form 151B.

Manufacturers of beverages and medical drugs

- Are to deposit a bank guarantee at the level of up to 15% and not less than 10% of the amount of the purchase tax that is due in accordance with the quantity that has been approved by the Ministry of Health and the CE Department on Form 374A.

If the business conducts the importing of alcohol and also makes local purchases of alcohol, the guarantee is to be at the rate of 15% and not less than 10%.

D. Approval of an application for the purchase of alcohol

The Conditional Exemptions Unit in Haifa is to check the application and the documents that have been submitted, it is to mark the quantity of alcohol that is approved for local purchase on the Form 374A and is to signify its approval by signing and stamping in the appropriate place.

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The validity of the approval will be until December 31 of the same calendar year. A copy of the form is to be delivered to the entitled party and will constitute a document for the supplier for the purpose of the sale of alcohol under a CE to the entitled party. A clerk in the unit is to input the detailed data on Form 374A in the computerized system – monitoring of alcohol under CE terms.

All of the directives in the matter of reporting, audit and prove of use (as detailed in Chapter 13.4 below) will also apply to entitled parties who purchase alcohol in a local purchase.

13. Release of goods in accordance under the terms of a customs exemption by the customers unit in the Ministry of Defense (MOD)

A. The Central Region Customs Office is responsible for conducting monitoring of goods that have been released under CE by the MOD.

B. The Central Region Customs Office is to furnish the MOD with periodic reports in respect of import declarations, under which goods have been released under CE for the purpose of checking proof of use.

C. The MOD is to verify that the entitled party for which goods have been released within a CE framework, is to furnish documentation proving usage.

D. Where goods have been released under discount code 621 in the Customs Tariff, the MOD is to furnish the CE Unit in the Central Region Customs Office with confirmation in the following format: "Goods that have been released by the Ministry of Defense in import declaration under discount code 621 in the Customs Tariff, have been approved by the authorized official and have been delivered for use by the IDF".

This confirmation will constitute a document proving usage, for the purpose of closing the monitoring of the use of such goods. The confirmation is to be scanned by a clerk in the unit and attached as a file to the relevant computerized file.

E. What is stated above in this section does not apply to the release of motorized vehicles under discount code 621, which relate to a significant item in item 87. The Ministry of Defense is to report separately on the exit of the abovementioned vehicles from CE monitoring.

The Customs Unit in the Ministry of Defense is to amend the import declaration relating to motor vehicles to a regular import type declaration which will generate a payment order on the tax differences after the calculation of the taxes with depreciation for accelerated use, and the payments of the taxes are to be sent to the financial control department in the Taxes Authority.

The tax difference for the matter of these motorized vehicles will be calculated as from the time at which the ceased to be used for the exempt objective and were transferred to the public sales website.

14. Release of photography and telecommunications equipment by members of the foreign press

A. The objective of this procedure is to arrange the release of photography and telecommunications equipment that is imported by the foreign press (hereinafter – "The equipment"), in a manner that will enable proper control.

B. The equipment can be imported under one of the following alternatives:

1) As unaccompanied cargo.

2) As accompanied cargo.

a) By a member of the press in an agency that is active and registered in Israel.

b) By a freelancer member of the press, without an office in Israel.

3) By means of an A.T.A. Carnet

C. Equipment that is imported as unaccompanied luggage, which is recorded in a declaration (manifested) will be released solely and exclusively in accordance with an import declaration under a conditional exemption process at the level of an item (hereinafter - CE), under the importer number of the relevant agency under

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discount code 6.6500. The agency is to electronically attach an orderly list of the equipment on its headed notepaper to its declaration, whilst mentioning the value of the goods and their serial numbers.

D. In respect of equipment that is being imported for the first time as accompanied cargo by a member of the press belonging to an agency that is active and registered in Israel:

1) The member of the press is to submit an orderly list of the equipment, which is printed on the agency's headed notepaper, mentioning the value of the goods and their serial numbers, in the passenger hall at Ben Gurion Airport or at the land border. Two copies of the list are to be submitted and these are to be stamped by the customs clerk. A sample check is to be made from time to time, to verify the reconciliation of the goods to those actually imported.

2) An assessor in the passenger hall is to input the details of the passenger's possessions into the system (without taxes) in the press member's name for the agency in which he is employed, whilst noting his identity number (Company number) and is to attach a scanned copy of the list of the equipment to it. The assessor is to mark in the details of the passenger's possessions as a task for the accounts department at the customs office at Ben Gurion Airport.

3) Both of the copies of the list, which are signed by a clerk in the passenger hall are to be returned to the member of the press. One of the copies will remain with the agency for its monitoring purposes and the second copy is to be passed by the agency to the customs agent for further handling. The approved list will enable the entry of the goods into Israel through the passengers hall or the land border.

4) On the 1st day of each month, the agency is to make sure to submit an import declaration for all of the goods that have been imported in the past month. The declaration is to be submitted through a customs agent to the Customs Office at Ben Gurion Airport alone, without connection the entry station into Israel. The declaration is to be in a CE process at the level of the individual item and is to be classified under discount code 6.6500 in the Tariff. Lists of the equipment that has been imported, as detailed in sub-section 1) above is to be attached electronically to these declarations.

5) Import declarations that are submitted as detailed in sub-section 4) above is to be directed to constraint 348, as a result of the absence of consignment details. The constraint is to be handled by the accounts department in the Customs Office at Ben Gurion Airport.

6) The Supervisor of the accounts department in the Customs Office at Ben Gurion Airport is to compare the lists of equipment that have been attached to the import declaration and the lists that have been attached to the details of passengers possessions by an assessor in the relevant period for which tasks have been opened for the department, and is to verify that all of the equipment has been included in a declaration.

If all of the equipment is in the declaration the permit is to be approved in the constraint. If not all of the equipment is included, the agencies in question is to be required to pay the taxes that apply to it.

E. In respect of equipment that is imported by a freelance member of the press without an office in Israel:

The member of the press is to release the equipment against an appropriate deposit or against a credit card imprint, which will not be charged and which will serve as a deposit alone until the equipment is taken out of Israel.

F. All agencies or members of the press are entitled to release equipment under an A.T.A. Carnet pursuant to the customary procedure, or against an appropriate deposit.

G. The importing of telecommunications equipment of certain types is subject to the receipt of approval from the Ministry of Communications, especially for wireless or satellite equipment. The Supervisor in the passengers hall is entitled to give authorization in exceptional cases and at his discretion for the entry of such goods, without approval from the Ministry of Communication, under the following conditions:

1) In accordance with a declaration by the member of the press, that the equipment is to be taken out of Israel within no more than a fortnight.

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2) The member of the press is to deposit a monetary guarantee in accordance with the value of the equipment in accordance with the Supervisor's judgment.

H. The export of goods:

1) When equipment is taken temporarily abroad and it is to return through Ben Gurion Airport or one of the land border crossings, the member of the press is to sign on an appropriate temporary export form, in order to ease its return to Israel at a later stage.

2) An export declaration, as is customary, or the above list will serve as proof of the final exporting to close the CE monitoring, where the exporting is confirmed by the passengers hall at Ben Gurion Airport or the land border crossing.

The passengers hall at Ben Gurion Airport or the land border crossing will receive a copy of the list at the time of the export, they are to confirm the execution of the export and they are to transfer it directly to the CE Unit in the Central Region Customs Office, which is to take action to close the monitoring.

I. Sundry

1) Every agency is to conduct exact monitoring of the movements of the equipment for its own purposes and also for customs purposes.

When opening a conditional exemption file in the Central Region Customs Office, every agency is to be required to deposit a bank guarantee as detailed below:

a) An agency with a large volume of imports is to deposit a bank guarantee in an amount of NIS 30,000.

b) An agency with an intermediate volume of imports is to deposit a bank guarantee in an amount of NIS 20,000.

c) An agency with a small volume of imports is to deposit a bank guarantee in an amount of NIS 10,000.

15. The importation of goods under a customs exemption by nursing and health institutions

A. General

1. This section arranges the subject of the importing of goods by a public institution as defined in Section 9(2)(B) of the Income Tax Ordinance, for the objective of welfare or health (hereinafter- "A public institution"), pursuant to Section 12 of the Addition to the Customs, Excise and Purchase Tax Law (Cancellation of a special exemption) – 1957 (hereinafter – The Customs Law), and also the Customs Tariff and Exemptions from Purchase Tax on Goods Order (Temporary Provisions No. 14) – 2012 (hereinafter – The Order), (see Appendix E).

2. A public institution, which imports goods that have been donated to it without any consideration whatsoever and which are designated for distribution without consideration to needy people or for the institution's routine operations, is to be classified with discount code 8, under "goods, sundry", of the Customs Tariff and Exemptions from Purchase Tax on Goods Order (Temporary Provisions No. 14) – 2012 (hereinafter – discount code 8).

In the directives, the following terms are to be interpreted as described:

"The institution's routine operations" – the use of goods by the public institution or the lending of the goods to another public institution without consideration (except for the depositing of a deposit).

"Tax year" – a period of 12 months commencing on January 1.

3. The supervision and monitoring of the importing of goods by entitled public institutions is to be at the responsibility of the Conditional Exemptions Unit in the Customs Officer, in accordance with the address at which the public institution's main activity is conducted (the Jerusalem, Haifa and Central

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Region Customs Offices), in accordance with the geographical distribution that is mentioned in the conditional exemption procedure.

B. Public institutions that are entitled to import under discount code 8

A public institution is defined in Section 9(2)(b) of the Income Tax Ordinance as follows:

"Public institution" – a body of at least seven persons most of whom are not related to each other, or an endowment, most of the trustees of which are not related to each other, which exists and functions for a public purpose, its property and income being only used for the public purpose, and which submits annual reports on its assets, income and expenses to the Assessing Officer's satisfaction according to regulations made for this purpose by the Minister of Finance; for this purpose –"relative" – within the meaning of that term in section 76(d);

A public institution will be entitled to import goods under discount code 8, subject to the conditions that are detailed below:

1. The public institution meets the definition of "public institution" in Section 9(2)(b) of the Income Tax Ordinance, as detailed above, and the other conditions that are detailed below.

2. The public objectives of the public institution are to be welfare or health.

3. The public institution has been determined the Minister of Finance for the purposes of Section 46 of the Income Tax Ordinance.

4. The public institution has operated for at least 3 years in the welfare or health field as the case may be, of which at least one year is since the determination for the purposes of Section 46.

5. The public institution is a public benefit company, an association or dedication, which was incorporate in Israel and which hold confirmation of proper management in the Registrar of Associations or the Registrar of Dedication (as the case may be), in respect of the tax year in which it imports the goods.

6. The public institution is interested in importing goods that have been donated to it without any consideration whatsoever and the goods are designated for distribution without consideration to needy people or for the public institution's routine operations.

C. The substance and the extend of the conditional exemption

1. A public institution whose objective is health

A public institution whose objective is health, and which operates for that purpose, is entitled to import the goods that are detailed in discount codes 8.1000 and 8.2000.

2. A public institution whose objective is welfare

A public institution whose objective is welfare, and which operates for that purpose, and which has been approved by the Director General of the Ministry of Welfare and Social Services for the importing of goods under discount code 8, is entitled to import the goods that are detailed in discount codes 8.3000 and 8.4000

D. The legality of importing

1. Medical devices and accessories – confirmations of the legality of importing are required in accordance with the significant customs items.

In respect of medical devices and accessories that require the approval of the Medical Equipment Department pursuant to the Second Addition to the Free Import Order – 2011 (hereinafter – The Free Import Order) - it is recommended that the importer verify the requirements and position in advance with the Ministry.

2. Used clothing and footwear – are exempt from marking.

3. New clothing and footwear – require marking (labels in Hebrew) in accordance with the significant item but the name and number of the public institution is to be mentioned instead of the name of the importer.

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E. The submission of an application to the Conditional Exemptions Unit

An application for the opening of a conditional exemption file is to be transmitted to the relevant Conditional Exemptions Unit in accordance with the customary procedure for the opening of a CE file together with an application form for a public institution whose objective is welfare or health for the importation of goods under discount code 8 (see Appendix A).

All of the following documents are to be attached electronically to the forms:

1. A photocopy of the Association's certificate from the Registrar of Associations or a public dedication certificate from the Registrar of Dedications or a certificate of incorporation for a Public Benefic Company (hereinafter – PBC) from the Registrar of Dedications in the Ministry of Justice.

2. The updated articles of association of the association/ dedication/PBC.

3. Confirmation of proper management from the Registrar of Associations or the Registrar of Dedications.

4. Certification pursuant to Section 46 of the Income Tax Ordinance (Certification as a public institution for the purpose of donations).

5. Confirmation of the proper maintenance of accounting records and records pursuant to the Public Bodies Transactions Law – 1976.

6. Confirmation by an auditor regarding the maintenance of accounting records pursuant to the Income Tax directives (Maintenance of accounting records) -1973, and the Value Added Tax Regulations ((Maintenance of accounting records) -1976.

7. Confirmation of exemption from the deduction of tax at source.

8. A declarations signed by the members of the management of the public institution, the holders of signatory rights, which is approved and verified by an attorney (see Appendix B).

9. A public institution whose objective is welfare – it to attach an application for the approval of a public institution for the purpose of importing under discount code 8, by the Ministry of Welfare and Social services in which there are details regarding the nature of the public institution's welfare activities as well as a list of recommenders from Government Ministries or from local authorities that are familiar with welfare matters, who can evidence the nature of the public institution's welfare activities ,to the application for the opening of a conditional exemption file, in accordance with the format that is detailed in Appendix C.

10. A list of the goods in accordance with the significant customs items and a description of the goods (if it is not possible to submit this document at the time of the submission of the application for the opening of the file, this confirmation is to be furnished before the actual importation).

11. An account/ declaration by the donor of the quantity and the value of the goods that are being donated (if it is not possible to submit this document at the time of the submission of the application for the opening of the file, this confirmation is to be furnished before the actual importation).

F. The manner of the handling of an application in the Conditional Exemption Unit

Upon the receipt of the application form and the documents that are required as detailed in Section H, the Conditional Exemption Unit is to check the application and the documents as well as the degree to which the public institution complies with the conditions, as follows:

1. A public institution whose objective is health

a) On the importing of medical accessories and devices under discount code 8, the importer is required to furnish the following certification electronically:

1) In relation to medical accessories and equipment which in accordance with the significant customs item require the approval of the Medical Equipment Department pursuant to the Second Addition to the Free Import Order – the approval of the Medical Devices and Accessories Unit in the Medical Equipment Department of the Ministry of Health.

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2) In relation to medical accessories and equipment which do not require the approval of the Medical Equipment Department pursuant to the Free Import Order – approval from the Customs Collector in advance for the list of goods.

3) Approval from the Industries Administration in the Ministry of Economics that the goods are not of the type that are manufactured in Israel and that they are not replaceable with goods that are manufactured in Israel (see Appendix D).

4) A list of the goods in accordance with the significant customs items and a description of the goods.

5) An account/ declaration by the donor on the quantity and the value of the foods that are being donated.

b) A clerk in the Conditional Exemptions Unit is to require the depositing of appropriate collateral.

c) The abovementioned documents are to be transmitted electronically to the Conditional Exemptions Unit and is to attach them electronically to the import declaration.

2. A public institution whose objective is welfare

On the importing of clothing and footwear (discount codes 8.3000 and 8.4000) you are to act as follows:

a) After the receipt of the documents, the Conditional Exemptions Unit is to pass the association's declaration and the application form for approval for the public institution for the purpose of importing under discount code 8 to the Public Institutions Unit in the Special Functions Department in the Ministry of Welfare and Social Services for the purposes of checking the application and approving it, in Part D of the application form. The form that has been signed by the Ministry of Welfare is to be returned to the Conditional Exemptions Unit.

b) Upon the receipt of approval of the Ministry of Welfare, the Conditional Exemptions Unit is to notify the public institution that its application has been approved and that it must deposit the guarantees that are required, as detailed below. After the depositing of the guarantees, the institution is to be defined in the system as an active CE importer with discount code 8, until the end of that calendar year and in accordance with the type of goods, their volume and values, which have been approved.

c) If the application has been rejected, the Conditional Exemption Unit is to send reasoned notification to the public institution accordingly.

G. Guarantees

A public institution that is entitled to import goods under discount code 6, is to be required to deposit the following guarantees, in addition to complying with all of the conditions that are set in this procedure:

1. A bank guarantee in an amount of NIS 20,000. This guarantee is to be renewed in accordance with Section I.1. below.

2. An autonomous commitment to indemnify from the public institution's economic managers (Customs Form 151A – third party). In a public institution in which no economic manager has been appointed, the said commitment is to be provided by the public institution's chairman.

The Claims, Deposits and Deficits Unit is to check that the person who signed on the autonomous commitment is the owner of assets in accordance with its procedures.

H. Further handling in the Conditional Exemptions Unit

1. The system is to conduct monitoring in accordance with the import declarations of each association in relation to the types, quantities, value and weight of the goods.

2. The closing of the system for conditional exempt importing will be done automatically by the system in accordance with the conditions for the item and as detailed in section C at the earlier of the exhaustion of the full rights under discount code 8 or at the end of the tax year (31.12.XX).

I. Additional provisions

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1. The confirmations that are required in this procedure are valid for the tax year in which the file is opened, and accordingly, in every new tax year, the public institution must resubmit all of the confirmations that are required, before importing.

2. The public institution is to inform the Conditional Exemptions Unit in which its file has been opened of any change in one of the details that has been delivered to the Conditional Exemptions Unit and/or any change in the documents that are relevant to this procedure, including cancellations (the cancellation of approval under Section 46 or non-renewal thereof, the cancellation of the confirmation of proper management, a change in the objectives of the public institution, a change in the public institution's objectives, a change in the objectives of the importing and etcetera.

3. The public institution is to maintain an exact and detailed record in relation to the distribution of the goods that it imports to the needy (recipient's name, address, telephone number, and the timing and quantity of the distribution of the goods) and also in relation to the use of the imported goods by the public institution for its routine operations, except for used clothing and footwear.

4. The public institution is to maintain inventory records.

J. The conducting of an audit by the Conditional Exemptions Unit

1. The Supervisor of the Conditional Exemptions Unit is to include the conducting of an audit at the public institutions in the unit's work plan, at his judgment, and in accordance with directions from the Collector and the management of the Customs Department.

Within the framework of the audit, the Conditional Exemptions Unit is to verify the institution's compliance with the conditions for the conditional exemption, and it is also to check the exact recording maintained by the public institution insofar as it relates to the distribution of the imported goods to the needy or for its routine operations and the inventory records.

2. At the end of each calendar year, the public institution is to submit a declaration that has been signed by the institution's CEO/ Chairman that all of the goods that have been released under discount code 8 have been used under the conditions for the item, and that the institution is maintaining an inventory report as is required. This declaration will constitute proof of use for the closing of the monitoring of the import declarations that have been released in that calendar year.

3. If the audit finds that the public institution has not met the conditions for the conditional exemption or that it has used other than for the purposes of the exemption, the full amount of the taxes that apply to the goods that have been imported will be collected and this is to be without detracting from the Taxes Authority's authorities to institute various means and/or proceedings in accordance with the circumstances of the case and in accordance with the provisions of any law.

In these cases, the Supervisor of the Conditional Exemptions Unit is to pass the findings to the relevant persons.

Part 13.4 – Reporting, audit and proof of use


A. In this part, the procedure for recording and reporting on imports and local purchases of goods, which are purchased or imported by those entitled to a conditional exemption, as well as the procedure for proof of the use of goods.

B. In any place in this part in which the maintenance of records or the maintenance of inventory records is mentioned, the intention is to computerized recording or management of inventory.

2. Permanent equipment

A. Anyone who is entitled to a conditional exemption on imports and local purchases of permanent equipment, is to maintain a record in respect of it. If the goods require storage, they are to be stored in a storeroom designated for that purpose within the area of the plant.

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B. A computerized account is to be opened for each type of product, in which an exact description of the product is to be recorded (trademarks, catalogue numbers and etc.).

C. The account is to include the date of the import and the number of the entry into inventory note (which details the import declaration or the confirmation of purchase) for that product.

When parts are taken out for assembly, or when inventory is taken out for replacement, the date and the number of the transfer order, which details the quantity taken out, its designation and a description of the place where it is located, are to be noted.

3. Spare parts for permanent equipment

A. Whoever is entitled is also to maintain a record in respect of spare parts that have been released under a conditional item. The spare parts are to be stored in a storeroom and an inventory account is to be maintained in respect of them.

B. The spare parts are to be taken out of the storeroom with approval in writing from the responsible person in the company. The replaced parts, if they are no longer in use, are to remain in the storeroom until approval is received for their destruction from the Conditional Exemption Unit or until the taxes that apply are paid.

C. The inventory record is to include the date, the entry note number or the exit note number, and the number of the import declaration. When parts are issued for assembly, the location of the assembly and the total issued are to be mentioned.

D. At the end of every accounting year, those entitled are to submit a report to the Supervisor, which is certified by a qualified CPA (in the format that will be determined by the Supervisor) regarding the use of the equipment, in parts for assembly or for spare parts – which have been released under a conditional exemption.

Those entitled may submit such a report quarterly or semi-annually, at their discretion, in coordination with the Supervisor.

4. Raw materials

A. Those entitled are to submit a list to the Supervisor, which describes the products that it produces from the materials that have been released under a conditional item or a conditional discount code, noting the names of the raw materials and the quantities that are required by it to produce each unit of the finished product (product tree).

B. The Supervisor is to determine the items on the list for which the entitled party is to furnish an engineer's confirmation to the Supervisor's satisfaction (an engineer, pharmacist, food technologist and etc.).

C. Those entitled are to open a computerized account for each type of raw material that is released under a conditional item or a conditional discount code, in which the quantities entered, the quantities issued to production and the balance are to be recorded. For each entry or issuance transaction, they are to record the number of the transaction document: on an entry = the number of the import declaration, and on an issuance – the work order.

D. Alcohol as a raw material – the exemption for alcohol (in Customs Item 22.07 and 22.08) will only apply in cases in which the alcohol is used as part of the production process. For example: Alcohol that is used for research and development is not covered by the exemption and etc.

5. Goods that have been taken out of all use

An entitled party is to submit a list of the goods that have been taken out of use to the CE Unit, as necessary, noting their quantity and description and is to inform the Supervisor if they are destroyed, sold or abandoned.

If it is decided to destroy it – this is to be done in the presence of two customs clerks.

If it is decided to sell it – this is to be done after the payment of the taxes that apply.

6. Reporting on the use of goods

A. After the opening of a CE file in the entitled party's name, a clerk in the CE unit is to send them the recording, reporting and proof of use procedure, in the format that appears in Appendices D – F.

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B. A report on the use of the goods and the movements therein is to be submitted by the entitled party pursuant to the procedures that have been set, once a year, close to the annual balance sheet date, but no later than two months after the submission of the annual balance sheet.

The reports are to be submitted after having been approved and signed, as necessary, by those empowered to sign in the entitled party's name, and by an auditor as necessary, as determined by the Supervisor.

C. A duty applies to the entitled party to report in advance to the Supervisor of its intention to cease to comply with the terms of the conditional exemption, including a change in the use of the goods by the entitled party itself.

7. Declaration by an importer

Immediately after the start of the use of the goods, but no later than one year from the release of the goods from the customs' supervision, the importer is to declare the manner of the use that has been made of the goods in writing.

8. Audit

A. An audit of the records (or other audit) will be conducted at the importer's premises at such times as the Supervisor may determine, pursuant to the annual work plan.

B. The Customs Collector is to assist the Supervisor in the allocation of expert staff for the audit, in accordance with the type of goods for which for which the audit is being conducted (auditor, appraiser, inspector or engineer).

C. In advance of the conducting of the audit, the auditor is to coordinate most of the data on the imported goods (description of the goods, the manufacturer, model, serial number of any and etc.) in order to identify them clearly at the time of the conduction of the use of audit for proof of the use.

9. Monitoring of proof of the use of the goods

A. Immediately upon the allowance of the import declaration under CE conditions, a date for the performance of "proof of use" will be set for it in the system in order to verify the that the goods were used in accordance with the conditional exemption conditions.

For regular conditional exemption declarations, "proof of usage" is to be performed within one year of the time of the release, generally in reliance on the importer's report (certified by an auditor, as necessary) and in accordance with an audit by staff from the Conditional Exemptions Unit at the importer's premises.

For temporary import declarations, an audit is to be conducted on the use of the goods up to the proof of exporting in reliance on an export declaration.

When conducting an audit at the importer for proof of use, the staff from the Conditional Exemptions Unit is also to check whether the imported goods met the pre-conditions that are required for the purpose of classifying as a conditional item or a conditional discount code (the existence of certifications and etcetera).

B. After the submission of the importer's declaration for proof of use, a clerk from the Conditional Exemptions Unit is to update the performance of proof of use, the date of the performance, the document number and the type of proof of use (as detailed in the following paragraph) in the system.

C. There are 12 types of proof of use, some of which are relevant to regular CE and some of which to temporary importing:

1) Audit.

2) Theft.

3) Report by the Palestinian Authority.

4) Report.

5) Destruction.

6) Exit from monitoring.

7) Damage.

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8) Abandonment.

9). Payment of tax.

D. If the importer requests, for a justified reason, that the target date for the performance of proof of use be deferred, a clerk in the Conditional Exemptions Unit is to update the new date in the system.

Such a justified reason may be, for example, a delay in the construction of a production hall in a plant, a delay in installing equipment, the need for more continued use of goods that have been imported temporarily.

E. The clerk is to produce a report for the purpose of routine monitoring of the performance of proof of use. A clerk is to produce this report in order to perform proof of use in accordance with the importer's declaration.

The report is to be produced for a specific importer for a period, as mentioned in the importer's declaration.

After the production of the report it will be possible to compare the data that appear in it to those in the importer's declaration.

F. For an importer that has not submitted such a declaration, the CE clerk is to act as follows:

1) In a temporary import – a report is to be produced once a month.

2) For other importers – a report is to be produced once a quarter.

G. A physical audit is to be conducted at least once a year at a CE importer, for proof of the use of the goods in accordance with the conditional exemption conditions.

10. Physical audit of the proof of use in hotels, and in branches of institutions and companies, which are part of a national network

A. In the performance of an audit for proof use in hotels and in branches of companies and institutions, which are part of a national network and which are under the treatment of one Customs Office, where their CE file is maintained in the system under the number of the network or the company in another Customs Office, the following course of action is to be followed:

1) The CE unit in which the Company's CE file is maintained is to refer to the CE unit, within the territory of which one or more of its hotels or branches are located and request that it conduct an audit in them for proof of the legal use of the goods that have been released under conditional exemption details.

2) Details from the system, photocopies of documents and the rest of the data that are relevant to the audit being requested are to be attached to the request.

3) The unit that has asked for an audit to be conducted, is to monitor the request until the results are received.

4) The audit in the hotel or in the other site is to be performed by the CR unit within the territory of which the hotel or the other site is located.

5) After the performance of the audit, the unit that performed the audit is to transfer its findings to the CE unit that managed the CE file – for the closure of the monitoring or for the sending of appropriate notification of a charge.

Part 13.5 – Temporary importation


A. The provisions of this part will apply to all types of temporary importation of goods.

B. This part should be read together with the chapter in the customs procedures that deals with the execution of treaties.

C. The release of goods is to be performed subject to the conditions that have been set in the relevant treaty in the classification directives relating to item 6, insofar as relates to treaties that deal with temporary importation, and to discount codes relating to temporary importation.

D. The exemption under the treaties will be granted solely and exclusively to imports from countries that are signed on the relevant treaty.

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2. General

A. Goods that are imported temporarily are goods that are imported for a defined objective and they are intended to be re-exported within the period of time that has been set, without undergoing any change.

B. Furthermore, pursuant to Section 162(C) of the Customs Ordinance, discount code 212 of the Customs Tariff and the classification directives relating to item 212 of the Tariff Appendix, it is possible to import goods under a temporary import for the purpose of the performance of the following activities: The processing, repair, renewal, presentation in public of the goods, packaging the goods together with various types of goods, importing packaging for packing goods for the purpose of exporting them, attaching labels.

For the temporary importation of goods under discount code 212, for the purpose of the performance of other activities that are not detailed above, it is necessary to refer to the person who is responsible for conditional exemptions in management in order to receive approval.

Such goods must be designated for re-export, within a time period that is defined in advance by the CE unit, after activity has been performed on it as detailed above, but no later than two years from the time of the import.

An import under discount codes 212 and 207 requires pre-approval from the Customs Collector or his deputy.

3. Goods that are designated for exhibitions and for similar events

A. For goods that are designated for exhibition and other similar events, proof must be demanded, to the Supervisor's satisfaction, of the holding of the event, the timing of the event and the length of the event.

B. For this purpose, "event" (as defined in the customs treaty regarding reliefs for importers of goods for display or for use in exhibitions, in fairs, in conferences or in similar event), means:

1) An exhibition, fair or show, or similar presentation for commercial, industrial, agricultural or craft matters; or

2) An exhibition or a conference, which has been organized for charitable purposes; or

3) An exhibition or a conference, which has been organized primarily in order to promote a branch of studies, art, craft, sport, or scientific, educational or cultural activity, to promote friendship between peoples or to promote religious or ritual knowledge; or

4) A conference of representatives of an international organization, or international group of organizations; or

5) A representative conference of an official or memorial nature.

Comment: This definition does not apply to exhibitions that have been organized for private purposes in stores or businesses in order to sell the imported goods.

4. Leaving goods in Israel

The Supervisor is entitled to give approval for goods that have been imported temporarily to be left in Israel, and solely that the following conditions are met:

A. The taxes that apply in accordance with part 13.7 below are to be paid.

B. The goods meet the legal conditions for importing (approval from the duly authorized authority, licenses and etc. for leaving the goods in Israel.

Part 13.6 – Closure of the monitoring of goods that have been released under an exemption - conditional

1. Content of the part

This part deals with the closure of the monitoring of goods that have been released under conditional exemption terms. The monitoring may be closed for various reasons, such as: compliance with the conditional exemption conditions, the sale of the goods with the Authority's approval after the payment of the taxes, the destruction of

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the goods, a change in the designation of the goods with the Authority's approval, the theft of the goods or the abandonment of the goods.

2. Closure – monitoring

The closure of the monitoring is to be executed at the importer's request, or it will be initiated by the Conditional Exemption Unit following an audit at the importer's premises, if these conditions are met:

A. The goods have met the conditions for exemption for a period of 7 years, except for motor vehicles and works of art. For motor vehicles that have been imported other than for the purpose of temporary importation (for example, discount codes 16 and 621), the closure of the monitoring will be performed against the payment of the taxes or abandonment or destruction under the Customs Department's supervision as detailed in this procedure.

B. The goods have ceased to be used for exempt purposes, and the taxes that apply have been paid.

C. The goods have been exported to abroad, or have been destroyed with the Customs Department's approval.

3. The transfer of goods and/or a change in their designation

A. Goods, which have been released under conditional exemption conditions to an importer that is entitled to a (full or partial) exemption) - are not to be transferred to someone who is not entitled, and nor is any other use to be made of them other than the purpose for which the exemption was approved (and not even by the party entitled to the exemption itself), unless a duly authorized customs clerk has approved this in advance and the taxes that apply to the goods have been paid.

B. Despite the aforesaid, it is possible to transfer goods from one party that is entitled to an exemption to another party that is entitled to an exemption (the party must be entitled to the same type of exemption), with the approval of the Supervisor of the relevant Conditional Exemption Unit.

In order to execute the transfer, it is necessary to act as follows:

1. An application form for a transfer between entitled parties (Form 374) is to be submitted to the Conditional Exemption Unit by the transferring importer alone.

2. The submitter of the application can download the form from the Taxes Authorities' internet website.

3. Before submitting the application, the submitter of the application must receive the agreement of the party to which the goods will be transferred, which is to sign on the form.

4. The form is to be submitted manually to the CE Unit, and input into the system by a CE clerk by way of special purpose screens.

5. Before inputting the data on the form, the handling clerk is to check that they are in order.

6. If the transfer is being executed between CE importers who are registered in CE units in different customs offices, the application is to be passed for a round of approvals in both of the customs offices.

7. If the transfer relates to all of the goods, the approval of the transfer will automatically close the record of the transferring importer and will open the monitoring for the recipient.

8. If the transfer relates to only part of the goods, the monitoring of the good at the transferring importer will stay open, in parallel to the opening of monitoring at the recipient.

9. Following the approval or rejection of the application, an appropriate letter must be sent to the submitter of the application. If two CE units have been involved in the approval process, the decision is to be brought to the knowledge of the second CE unit.

4. The destruction of goods, which have been released under the terms of a conditional exemption

Goods, which have been released under conditional exemption conditions, have ceased to be used for the purposes of the exempt, because of an event that does not enable their use, such as: being worn out, damage, malfunction and similar matters, and this has been proven, to the Supervisor's satisfaction, they will be destroyed by the importer under the Customs Department's supervision.

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Every destruction is to be accompanied by an appropriate report (on Customs Form 17).

In exceptional cases, the Supervisor is entitled to approve the destruction by the party entitled to an exemption by themselves, without the Customs Department's supervision.

After the destruction of the goods, it will be possible to close their monitoring.

The expenses relating to the destruction will apply to the entitled party.

5. Closure – monitoring in respect of the theft of goods/ a vehicle

A. Monitoring can be closed for goods, where it has been proven beyond doubt that they have been stolen, without the need for the payment of taxes in the case of motor vehicles or high tax goods, as detailed in sub-section B below.

B. Motor vehicles, alcohol or other goods bearing high taxes that have been collected, for which guarantees have been deposited and which have been insured under insurance policies, including the taxes that apply (as stated in Section 13.3.5 paragraph c above)- the closure of monitoring, for which the payment of the taxes that apply will be executed.

6. Updating of closure – monitoring in a system

A clerk in the Conditional Exemption Unit is to update the closure of the monitoring in the system in accordance with the reasons that are detailed in Section 9C of Part 13.4 above.

In some of the cases in which the monitoring is closed, it is necessary to pay the taxes that apply (see Part 13.7 below). In such cases, a clerk in the Conditional Exemption Unit is to update the type of the closure of the monitoring in the system, but only after the payment of the taxes.

Part 13.7 – Payment of the taxes

1. Content of the part

The ways to calculate the taxes that apply to goods that have been released for the first time under a conditional item will be detailed in this part.

2. Payment of taxes in respect of goods that are imported under a temporary importation and which have been classified with a conditional exemption

A. Goods that have been imported under a temporary importation, which have been released under a conditional exemption, which have ceased to be used for the purposes of the exemption and the Supervisor has given approval for leaving them in Israel, (as stated in sub-section A of Section 13.5.4) – the day of the release of the goods from customs supervision will be deemed to be the day on which the goods ceased to be used for the purposes of the exemption.

In such cases, the taxes will be payable in accordance with: the value of the goods, the rate of the taxes, the currency exchange rate, as may apply at the time of the importation, with the addition of interest and linkage, which will be calculated from the time of the importation and up to the time of the actual payment. If goods are imported under discount code 207, then action is to be taken as aforesaid, after deducting the taxes that have already been paid; which is in accordance with Section 6(E) of the Customs Tariff Order.

B. In cases of temporary imports, in which the price, if paid, has been paid for the right to use the goods, (such as rental or leasing), and not for the purchase of the goods, Section 132 of the Ordinance will not apply and accordingly the goods are to be valued under the alternative methods, which are mentioned in Section 130 of the Ordinance (identical goods, similar goods and etcetera).

C. Generally, in cases in which a deficit has been collected (other than at the importer's initiative) as a result of breaches of the terms of the conditional exemption (but where the timing of the breach is unknown), an arrears fine will also be imposed from the time of the importation and up to the time of the actual payment. However, where the time at which the terms of the exemption were breached is known, the fine will be imposed as from that time.

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3. Assessment and the payment of taxes in respect of goods that have ceased to be used for the objectives of the conditional exemption

A. For goods that have been imported other than under a temporary importation, which have been released under a conditional exemption, which have ceased to be used for the purposes of the exemption – the value of the goods and the rate of the taxes will be determined in accordance with the time at which the goods ceased to be used for the purposes of the exemption. If the time at which they ceased to be used for the purposes of the exemption is not known, the timing of the release of the goods from customs supervision will be deemed to be the day on which they ceased to be used for the purposes of the exemption.

The taxes will be payable with the addition of linkage differentials and interest as from such time.

B. In cases in which a deficit has been collected (other than at the importer's initiative) as a result of breaches of the terms of the conditional exemption, linkage differentials, interest and an arrears fine will be imposed as from the time at which they ceased to be used for the purposes of the exemption.

If the time at which they ceased to be used for the purposes of the exemption is not known, the timing of the release of the goods from customs supervision will be deemed to be the day on which they ceased to be used for the purposes of the exemption.

C. The determination of the value for the purpose of collecting taxes in these cases (apart from motor vehicles), will be done as follows:

1) If the goods are sold by an entitled party in a public tender, the price that is achieve in the sale will be recognized at the value for the calculation of the taxes that apply, and solely that the Supervisor has been convinced that the tender was properly conducted (the publication of the tender in a newspaper and the price offers that were received are to be demanded).

2) If the owner of the goods has not agreed to a price that was proposed in the public tender and has sold the goods at a higher price or in a trade-in transactions, other than within the framework of a public tender, the Supervisor is to consider whether there is justification for accepting this price as a basis for the determination of the value.

3) For goods that have not been sold within the framework of a public tender, as stated in paragraph A above, the value will be determined after deducting depreciation of 15% for each year of use (hereinafter – depreciation for use), as from the time of the release of the goods.

4) If the value of the goods and/or their classification at the time of the release were erroneous, they are to be corrected before the calculation of the depreciation for use.

5) Depreciation for use (as stated in sub-section 3 above) is not to be deducted if the goods have ceased to be used for the purposes of the exemption before the end of a period of one year from the date of their release.

6) In respect of the value of a vehicle, see the procedure of motor vehicles.

4. Correction of an import declaration with goods on customs-exemption terms – the calculation of taxes, the extension of the period

A. A clerk in the CE Unit is to correct the import declaration if necessary.

1) From an import declaration with a row for CE goods to an import declaration without goods under CE terms, at the importer's request or at the initiative of the CE Unit (the handling of the collection will be performed in the CDD/ accounts department).

2) The extension of a temporary import's stay (pursuant to discount code 207) – where the importer is interested in extending the stay of the goods, which have been imported temporarily to Israel, and which have been released under discount code 207.

B. The need to correct a declaration with goods under CE terms to a non-CE declaration may arise in the following cases:

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1) The sale of the goods by the importer – the importer announces that it has sold the goods, where the goods had been released on conditional exemption terms.

2) A change in the designation of the goods – the importer announces a change in the designation of the goods, where the goods had been released on conditional exemption terms.

3) A deficit as a result of non-compliance with the conditions for the exemption before proof of use – before the execution of proof of use, the clerks in the unit discover that use has been made of the goods other than in accordance with the conditions for the exemption.

4) A deficit as a result of non-compliance with the conditions for the exemption after proof of use – after the execution of proof of use, the clerks in the unit discover that use has been made of the goods other than in accordance with the conditions for the exemption.

5) A temporary import is left in Israel – the importer requests to leave goods that have been imported temporarily to Israel in Israel.

5. Plants that are the subject of a stay of proceedings, which are in liquidation or receivership, and importers who are the subject of bankruptcy proceedings

A. Information that reaches the management on a plant that is in a stay of proceedings, in liquidation or in receivership, or on an importer that is in bankruptcy proceedings – is to be transferred urgently to the relevant customs collector.

The Customs Collector is to bring this information to the knowledge of the relevant units, including the Conditional Exemption Unit

B. A supervisor in the Conditional Exemption Unit is to check whether in the past the plant has released goods under a conditional exemption and the goods are still being monitored. The Supervisor is to send a registered letter to the receiver or the liquidator and is to notify them that these goods have been released under a conditional exemption and that such goods may not be sold, transferred or delivered to another party without the payment of the taxes that apply.

The sale or transfer of such goods without the payment of the taxes that apply to them, amounts to a criminal transgression.

Pursuant to a demand from the liquidator, he is to be sent details of the debt, in accordance with the circumstances, the Supervisor is to consider and to decide whether to demand the payment of the taxes that apply to the goods that have been released by the plant under conditional exemption terms, or to enable the continuation of its activity under conditional exemption terms in respect of these goods (in cases in which the receiver continues to operate the plant as a going concern).

All of the handling of this issue is to be done in cooperation with the Liquidations and Difficult Collections Unit.

6. Charges with taxation – the importation of residue and waste from raw materials that have been released under a conditional exemption

A. Import taxes will apply to residue and waste from raw materials (which have been released under a conditional exemption), which have been transferred to a party that is not entitled to an exemption, or which have been used for some other purpose other than what was determined in the conditional exemption, unless they have been abandoned or destroyed under the supervision of the Customs Department.

B. The taxes that will apply to the residue and waste will be calculated in accordance with their value as residue and waste, and not in accordance with their original value as raw materials. A price quote in respect of these goods as residue and waste is to be required from the importer. This price quote will serve as a basis for the determination of the value by the Unit.

7. The transfer of used goods from hotels to institutions for humanitarian objectives

A. Definitions

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In this section, the term "public institution for nursing and welfare objectives" (hereinafter – The institution" (hereinafter – The institution) is to be interpreted as: An association, Union, unit of the Ministry of Welfare or of a local authority – which is engaged in assisting the layers of the population in distress, or the population of injured people, which has been approved for that purpose by the supervisor.

For example: The Volunteering Unit in the Ministry of Welfare, the Welfare Departments of local authorities, the Center for Second Hand Domestic Aids), shelters for battered women, Ilan (The Israeli Association for Children with Disabilities), Akim (The National Organization for People with Intellectual Disabilities and their Families), and etcetera.

B. A hospital that has released goods under discount code 820 of the customs Tariff, which uses them in a period exceeding 5 years, and which is interested in delivering them without consideration to an institution, as defined above, is to act as follows:

1) The hotel's management is to refer to the Conditional Exemptions Unit in the Customs Officer in which the hotel's file is managed for approval for the transfer of the goods without consideration to an institution, on Customs Form 371 "Application for approval for the transfer of used goods from a hotel to an institution for welfare and nursing purposes (see Appendix M).

The clerk that is handling the case is to check whether the institution has been approved for the purposes of this procedure, whether the goods were used in the hotel for 5 years or more, and is to record his decision in Part D of the application form.

Upon the receipt of the goods in an institution, the manager of the institution is to sign on Part E of the form, confirming their receipt. The confirmation form is to be filed in the management of the hotel and is to be presented to the clerks in the CE Unit, on demand. The confirmation form, which has been signed in all of the parts, is to be scanned and attached to the hotel's virtual file. The form will constitute a document for the CE Unit for closing the monitoring of the goods.

2) Goods that have been transferred to an institution, as aforesaid, are to be used in the facilities of that same institution that has received them, or they are to be distributed by it without consideration to the needy people that it treats.

C. Hotels that have released goods under the said discount code, and which has used them in a period that does not exceed 5 years - a clerk in the Unit will determine the value of the goods for the purpose of the calculation of the taxes based on the value of the foods that was declared in the import declaration and after the calculation of the depreciation that is due.

After the payment of the taxes, the transfer of the goods will be permitted for any objective whatsoever.

Before the payment of the taxes that apply, the goods may not be transferred to other bodies.

D. If the hotel is no longer interested in holding the goods, but on the other hand it is not interested in transferring them to an institution, as defined in paragraph A above, or it is not interested in paying the taxes that applies to them, it must take action to have the goods destroyed with the approval and under the supervision of the CE Unit in the Customs Office, as aforesaid.

Part 13.8 – system reports

A. The Global Gate system makes a series of reports available to the CE Supervisors and clerks in the Unit, which are supposed to ease their work and even to assist in directing them.

1. Report---

This report is intended for the purpose of monitoring local purchases within a conditional exemption framework.

It is possible to arrange the profile of the report according to the following parameters:

CE region, date from – to, name of the entitled person and their identity number, CE details and the status of the application.

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The report provides details such as:

Total applications in the report, date of the submission of the application and the handling thereof, the number and the period of validity of the approval for local purchases, the name of the supplier, the quantity approved, the objective of the use and the tax loss on the purchase.

The report is to be produced and the data in the report are to be monitored at least once a quarter.

2. Report 21 – Monitoring proof of use

This report is intended for the purpose of monitoring CE importers, the end of an audit on the use directives at their premises, where the population for the report is import declarations having a related CE monitoring note.


CE region, date from – to, CE type, details of the exemption/ discount code, significant item, proof of use (without proof of use, initial but not final proof, final proof), data of the final proof of use (from to), the importer's name, the agent's name, the period of time allocated for a temporary import without proof of use and the number of the import declaration.

The report provides data such as:

The quantity of import declarations of each type of proof of use for each importer, the importer's name and number, CE item and significant item, date of permission, the general quantity for monitoring, the status of proof of use, the date of the last audit, the date of the initial proof of use, the date of the proof of actual use, the target date for monitoring and tax loss.

The report is to be produced and the data in the report are to be monitored at least once a month.

3. Report 22 – Declarations report

This report is intended for the purpose of monitoring import declarations in which there are goods in a CE process.


CE region, date from – to, importer number, CE item, type of CE and Israel or the Palestinian Authority.


Total CE declarations for an importer, import declaration number, date of the import, importer's name and number, significant item, CE item/ discount code, import value, tax loss, import quantity, CE type (permanent, temporary import) and date of the last update.

The report is to be produced and the data in the report are to be monitored routinely (daily).

4. Report 27 – Report on the importer's financial position

This report presents the CE importers for which a deficit file and/or a claim file has been opened in CDD.


CE region, type of CDD file (claim/deficit/all) and the status of the payment or repayment instruction.


Importer's name and number, import declaration number, type of CDD file, file number, amount of the principal, amount payable, status of the payment or repayment instruction.

The report is to be produced at least once a quarter.

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5. Report 529 – Report on importers in a CE region

This report presents the CE importers in a particular CE region.

The report be produced for active importers (whose files have an "open" status") alone or for inactive importers alone, of for all of them together.


CE region, CE type (permanent, temporary import, local purchase of all) and the status of the file (active, inactive or all).


Total importers, each importer's number and name, the importer's address and telephone number and the total declarations for each CE type, in accordance with the file's status.

The report can be produced in accordance with the Supervisor's decision and as necessary.

6. Report 530 – CE importers without an audit

This report presents the active or restricted CE importers who have a monitoring note in the system and for which no audit has been conducted in the period that is defined in the report.

The profile fields are:

Customs office, CE type, audit period – from to.

The report provides a list of importers (name and number) from the same CE area, which have an opening monitoring note in the system, but where no audit has been conducted at their premises in the period that is defined in the report, and the total number of importers in that situation.

The report is to be produced at least once a month.

B. To complete the picture, the following are details of the forms that have been defined in the computerized forms systems for use in the CE system.

1. Application for the opening of a CE file – Form 370.

2. Declaration by an importer on the use of goods – Form 381.

3. Application for an extension of a time.

4. Application for an exemption for local purchases – Form 374A.

5. Declaration on local purchases.

Part 13.9 – Directives for the handling of conditional exemption tasks

1. Contents of the Part

This Part details the instructions for handling various tasks that the computerized system directs for the staff in the Conditional Exemption Unit.

2. Handling instructions

Name of the task Handling instructions

1. Application for the opening of a CE file for an importer

The clerk is to input the importer's details in customers' service: legal possession, entity and

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contact person and they are to define it as a CE importer.

2. Visit to the importer's business premises The Supervisor in the unit is to allocate two clerks by name who are to conduct the visit and he is to determine what they are required to do.

3. Checking details in an application for the opening of a CE file by the Supervisor

The Supervisor is to consider the clerk's recommendation and make a decision.

4. Checking details in an application for the opening of a CE file by the management

The field manager in the management is to consider and make a decision in respect of motor vehicle files alone and is to present his decision to the Supervisor in the Customs Office.

5. Approval for a significant item in an application for the opening of a CE file by the management

The handling clerk is to check the item requested in the tariff, they are to verify that it is appropriate for the application and they are to prepare their approval for the CE file, or they are to reply as necessary to the importer that the item in not appropriate.

6. Application for the updating of an importer's CE file

The clerk is to check the substance of the update that is requested and if so, the update is to be made.

7. Checking an exemption on local purchases that have been made by the importer.

The clerk is to check that the application is approved and meets all of the conditions, that the importer has furnished a production report, whether a guarantee is required and etcetera.

8. The checking of import declarations on local purchases.

If everything is found to be in order, the clerk is to input Form 374A into the system.

9. The checking of an application for the extension of the last time for proof of use.

The clerk is to check whether the importer has exceeded the time that is permitted under the relevant discount code, and to make a recommendation on the continuation of the handling.

10. The handling of an importer's application to extend the last time for proof of use by the CE Appraiser.

The CE Appraiser is to check whether the importer has exceeded the time that is permitted under the relevant discount code, and to make a recommendation on the continuation of the handling.

11. The handling of an importer's application to extend the last time for proof of use by the manager of the field in the CE Unit.

The manager of the field in the CE Unit is to consider the handling clerk's recommendation.

12. The handling of an importer's application to extend the last time for proof of use by a Supervisor in the CE Unit.

The Supervisor is to consider the handling clerk's recommendation.

13. The handling of an importer's application to extend the last time for proof of use by the manager of the CE field in the Customs Department's management.

The Manager of the CE field in the management is to consider the recommendation by the Customs Officer and is to decide on applications for extensions of from 3 to 5 years, in respect of motor vehicles alone within the framework of discount code 207.

14. The handling of an importer's application for the extension of the last time for proving use by a Customs Collector.

The Customs Collector is to consider and make a decision for applications for an extension, in exceptional cases alone.

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15. The conducting of an audit on the importer's activity under a conditional exemption and the inputting of the results thereof.

The clerk who has conducted the audit is to input the findings of the audit into the system. The Supervisor is to decide on the continuation of the holding accordingly.

16. The closure of the monitoring of compliance with an importer's CE conditions.

The clerk is to verify that the conditions for the closing of the monitoring have indeed been met, and that they have the documentation that is required. The monitoring will be closed in accordance with the findings.

17. The closure of a CE file The clerk is to check that the importer does not have open declarations in monitoring, and that it has no debts. If everything is found to be in order, an instruction will be given to return the guarantees that exist and the file will be closed.

18. The closure/ restraining of a CE file after a non-recurring import for an importer

The clerk is to check that the importer has made proof of lawful use, and close the CE file. Until the completion of the check, the clerk is to restrain the file immediately after the execution of the non-recurring import.

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Appendix 13/A – Application for importing under a conditional exemption (Customs form 370) To be filled in

The State of Israel/ The Ministry of Finance The Taxes Authority in Israel The Taxes Authority in Israel Application for Importing under a Conditional Exemption Customs Form 370 (Page 1 of 2) The importer's application

Part A – Details of the importer/ the representative on its behalf

Importer's name: Importer's number:

Substance of the transaction:

Description of the importer's business: Details of the customs or the discount code (conditional) in the Customs Tariff, for which the application is being submitted

1) 2) 3)

For the period:

Address

Street House number Town Postcode

Representative's name: Function in the Company: Telephone number:

Fax number: Email address:

The importer's activities in the imported goods:

Part B – The managers that are authorized to sign on the importer's behalf (confirmation from an attorney/ accountant regarding the authorizations is to be attached)

Signatories name Identity number Position in the Company Signature

Part C – The importer's declaration or that of someone authorized on its behalf at the time of the submission of the license for a permit I declare hereby, that the details that are recorded above are correct, and I undertake to provide notification of any change that may occur in them, within 14 days from the time of the change. I declare that use will be made of the imported goods under the conditional items that are mentioned above, in accordance with the conditions for the item, within the period that is mentioned (in Part A), from the time of the importing.* I am aware that legal restrictions apply to the goods, which have been imported under any law, including the restrictions that are mentioned in the Customs item, which the goods could have been classified in according to their substance. Date Signature and stamp of the importer/ person authorized to act on its behalf

* Notification of additional items and the changes relating to compliance with the terms for the receipt of the exemption is to be given in advance before the goods are imported.

Part D – Verification of the signatures by means of: An attorney/ Certified Public Accountant Customs Agent/ Customs Clerk

On , there appeared before me the importer, or a person who is authorized to sign on its behalf whose name is mentioned above, after they identified themselves, they signed before me on this application./

Date Signature and stamp of attorney/ Certified Public Accountant Customs Agent/ Customs Clerk

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The State of Israel/ The Ministry of Finance The Taxes Authority in Israel The Taxes Authority in Israel Application for Importing under a Conditional Exemption

Customs Form 370 To be filled in

(Page 2 of 2) The importer's application

Part A – Details of the importer/ the representative on its behalf

Importer's name: Importer's number:

Substance of the transaction:

Description of the importer's business: Details of the customs or the discount code (conditional) in the Customs Tariff, for which the application is being submitted

1) 2) 3)

For the period:

Address

Street House number Town Postcode

Representative's name: Function in the Company: Telephone number:

Fax number: Email address:

The importer's activities in the imported goods:

Part B – The managers that are authorized to sign on the importer's behalf (confirmation from an attorney/ accountant regarding the authorizations is to be attached)

Signatories name Identity number Position in the Company Signature

Part C – The importer's declaration or that of someone authorized on its behalf at the time of the submission of the license for a permit I declare hereby, that the details that are recorded above are correct, and I undertake to provide notification of any change that may occur in them, within 14 days from the time of the change. I declare that use will be made of the imported goods under the conditional items that are mentioned above, in accordance with the conditions for the item, within the period that is mentioned (in Part A), from the time of the importing.* I am aware that legal restrictions apply to the goods, which have been imported under any law, including the restrictions that are mentioned in the Customs item, which the goods could have been classified in according to their substance. Date Signature and stamp of the importer/ person authorized to act on its behalf

* Notification of additional items and the changes relating to compliance with the terms for the receipt of the exemption is to be given in advance before the goods are imported.

Part D – Verification of the signatures by means of: An attorney/ Certified Public Accountant Customs Agent/ Customs Clerk

On , there appeared before me the importer, or a person who is authorized to sign on its behalf whose name is mentioned above, after they identified themselves, they signed before me on this application./

Date Signature and stamp of attorney/ Certified Public Accountant Customs Agent/ Customs Clerk

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Appendix 13/B – List of the international aid organizations that are entitled to an exemption from taxes in accordance with discount code 17 in the Customs Tariff

)Section 13.3.10.A)

Organization's name Address Business/ importer number

Care Israel P.O. Box 54258, Jerusalem 501100879

Diakonia P.O. Box 1411, Jerusalem 501100861

Amid East P.O. Box 19665, Jerusalem 501100887

Catholic Relief Services P.O. Box 19447, Jerusalem 501100895

Humanists 79 Nablus Road, Jerusalem 501100911

Lutheran P.O. Box 19178, Jerusalem 501101000

The Swedish Association for Relief for Individuals P.O. Box 19001, Jerusalem 501101018

UNICEF P.O. Box 8009, Jerusalem 501101091

The Red Cross 185, Ha'Yarkon Street, Tel-Aviv 501101067

Anera P.O. Box 19982, Jerusalem 501101075

The American Federation for Saving the Child (S.C.F.) P.O. Box 25042, Jerusalem 501101109

The Council of Churches in the Near East P.O. Box 19195, Jerusalem 500302104

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Appendix 13/C – Office holders in the Ministry of Welfare, who have been approved to sign on an exemption for international organizations (which are detailed in Appendix 13/B). (Paragraph 13.3.10.C).

)Section 13.3.10.A) To be filled in

The position

The Manager of the International Relations Department.

The Welfare and Organizations and Institutions Coordinator in Judaea and Samaria.

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Appendix 13/D – Procedures for recording and reporting (hotels) To be filled in

(Section 13.4.7)

The State of Israel

The Treasury/ The Taxes Authority in Israel Customs Office File No.: Date:

For the attention of

Dear Sir,

Re: Registration and reporting procedures for proof of the use of goods that have been released under a conditional exemption – use in hotels

1. In reliance on Section 6(D) to the Customs Tariffs and Exemptions and Purchase Tax on Goods Order, you are to conduct yourself in accordance with the registration and reporting procedures, as detailed below, for the purpose of proving the use of the goods that have been released under a conditional exemption, in accordance with the terms of the exemption.

2. Records

You are to maintain a computerized inventory record of the equipment that is to include, at the least, these data: The type of equipment, the quantity brought in, the date of entry, the import declaration number, the value of the equipment (in foreign currency, and the location of the equipment in the hotel.

3. The reporting

A. Within two months from the last day of the year, i.e. by March 1 of each year, you are to submit a report to this Customs Office, for the period from January 1 to December 31, which is to include:

1) A list of the equipment in the format of Appendix 13/D-1 below.

2) A declaration in the format in Appendix 13/D-2 below, which has been signed by the Hotel's General Manager and its Chief Accountant, noting a description of their position, and to which the hotel's stamp is affixed.

B. Confirmation from a Certified Public Accountant is to be attached, confirming inter alia that in the period of the report there were no sales or other transfers of goods that have been released by you under a conditional exemption.

4. Sales or use, other than for the objectives of the exemption

If, for reasons that were not expected in advance, you wish to sell goods that were released under a conditional exemption to the local market or to transfer them to others, or to use them for objectives other than within the framework of the objection – you are to received approval for this in advance from the Supervisor of the Conditional Exemptions Unit in the Customs Office, and pay the taxes that apply where necessary, or receive approval for the transfer of the goods without consideration for nursing and welfare purposes.

5. Sundry

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A. The transfer of goods to holders of similar conditional exemption rights with approval in advance, as mentioned above, is to be done using Customs Form 374, which can be received in this Customs Office.

B. Goods that have broken down or are no longer in use and which are designated for destruction, are to be destroyed with the approval of the Conditional Exemption Unit in this Customs House.

C. The CE Unit in the Customs House is to be notified immediately about any fire, theft or general loss of the goods.

D. The first report in the abovementioned format is to relate to the period from January 1 to December 31 and is to be submitted to the Customs Office by March 1, .

E. I would ask you to confirm within 14 days of the date of this letter, that you will comply with what is stated in these procedures, that if you do not do so, we will demand full guarantees to collateralize the payment of the tax under a conditional exemption.

F. The non-submission of reports at the time that is required, will cause steps to be taken, as is mandated by the non-proving of the lawful use of the goods.

We will be delighted to provide you with additional explanations, if necessary

Yours sincerely

Name and description of role

Attachments: Appendices 13/D-1 and 13/D-2

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File No.

Appendix 13/D-1 – To the procedure for recording and reporting (hotels) To be filled in

Report on the movement of goods that have been released under a conditional exemption

For the period from January 1 to December 31,

Imports and local purchases

Description of the goods

Opening inventory as at

1.1.----- Quantity

Import declaration

number Date

Transferred, sold or

destroyed with the

approval of the Customs

Office

Closing inventory as at

31.12.-----

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File No.

Appendix 13/D-2 – To the procedure for recording and reporting (hotels) To be filled in

Declaration

We hereby declare that:

1. All of the goods that have been released by us under a conditional exemption, have been received by us in the hotel and have been recorded in the records.

2. All of the abovementioned goods are used solely and exclusively for the objective for which the conditional exemption was intended.

3. We have not sold and have not transferred goods that have been released by us under a conditional exemption to others without approvals in advance, and the payment of the taxes that apply, where necessary.

4. All of the documents and the records are held by us and ready for your audit, as is required in the procedures.

The Hotel's General Manager The Hotel's Chief Accountant

The Hotel's stamp Date

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Appendix 13/F – Procedures for recording and reporting (plants) To be filled in

(Section 13.4.7)

The State of Israel

The Treasury/ The Taxes Authority in Israel Customs Office File No.: Date:

For the attention of

Dear Sir,

Re: Registration and reporting procedures for proof of the use of goods that have been released under a conditional exemption – use in plants

1. In reliance on Section 6(D) to the Customs Tariffs and Exemptions and Purchase Tax on Goods Order, I would ask you to conduct yourself in accordance with the registration and reporting procedures, as detailed below, for the purpose of proving the use of the goods that have been released under a conditional exemption, in accordance with the terms of the exemption.

2. The records

A. The inventory records

You are to maintain a computerized records of the quantitative movements of inventory for the type of inventory that are released under a conditional exemption, which is to include:

1) the opening inventory; 2) incoming items (purchases, returns, lending); 3) outgoing items; 4) instillations; and 5) the balance after each transaction.

The entries and exits are to be based on the relating documents, such as: entry vouchers or import declarations, work orders (exits to production) – which are to include relevant details and which are to be numbered.

The inventory movement records are to relate:

1) To raw materials – where a separate record is to be opened for each type.

2) To finished products – a separate record for each type and size.

B. A production order, instruction or commission

You are to maintain and file in a separate computerized or physical file of numbered production orders in which the quantities of the goods that have been put into production and the quantities and types of the products that have been produced are to be detailed.

The abovementioned documents are to be approved by the work manager or the production manager.

C. The agreement of the Conditional Exemptions Unit in the Customs Office is to be received for any significant change in the records that are required, as described above.

D. All of the abovementioned documents and records are to be retained for audit by the Customs Department.

3. The reporting

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Within two months from the last day of the accounting year, you will be required to submit an annual report (which overlaps with the accounting period) on the use of the above captioned goods for the objectives of the exemption.

The report is to include:

1) The summarized movements of inventory of the goods that have been released under a conditional exemption.

2) The summarized movements of inventory of the finished products.

3) Details of the releases from conditional exemption.

4. Declaration

A declaration in the format that is detailed in Appendix 13/F-4, which is attached, is to be attached to the abovementioned annual report.

5. Certificate from a Certified Public Accountant

A certificate from a Certified Public Accountant, which certifies the appendices that appear in Section 3 and 4 above, including the opening and closing inventory, is to be attached to the abovementioned annual report.

6. Sales or use, other than for the objectives of the exemption

A. If, for reasons that were not expected in advance, you wish to sell goods that were released under a conditional exemption to the local market or to transfer them to others, or to use them for objectives other than within the framework of the objection – you are to received approval for this in advance from the Supervisor of the Conditional Exemptions Unit in the Customs Office, and pay the taxes that apply where necessary.

B. Where necessary, an arrangement is to be determined in advance for sales and/or use other than for the purposes of the exemption – with the Supervisor off the Conditional-Exemptions Unit in the Customs Office.

The issue of the periodic reporting and the payment of the taxes that apply, including the interest payable under the law, are to be detailed in the arrangement where necessary.

This arrangement is to be detailed in an accompanying letter, which is to be attached to this procedure.

7. Sundry

A. The transfer of goods to holders of similar conditional exemption rights with approval in advance, as mentioned above, is to be done using Customs Form 374, which can be received in this Customs Office.

B. Goods that have broken down or are no longer in use and which are designated for destruction, are to be destroyed with the approval of the Conditional Exemption Unit in this Customs House and unless this is done, it will not be possible to recognize this.

C. The CE Unit in the Customs House is to be notified immediately about any fire, theft or general loss of the goods.

D. The final determination on the depreciation (if there has been any) will be made after an audit is conducted on behalf of the Conditions Exemption Unit.

E. Section 6(C) of the Customs Tariff and Exemptions and Purchase Tax on Goods determined that the use of goods that have been released under conditional exemption terms, is to be done within one year from the date of the release. Accordingly, if you hold goods that have not been used within a year, as aforesaid, you are to pay the taxes that apply.

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In cases where a reasonable reason exists for non-payment, you are to refer with a reasoned application to the Customs Office for the extension of the validity for an additional period, and the application will be discussed seriously.

F. The first report in the abovementioned format is to relate to the period from January 1 to December 31 and is to be submitted to the Customs Office by March 1, .

G. The report and the declaration are to be confirmed with the signature of the Operations Manager and the Chief Accountant and with the plant's stamp embedded upon them.

8. I would ask you to confirm within 14 days of the date of this letter, that you will comply with what is stated in these procedures, that if you do not do so, we will demand full guarantees to collateralize the payment of the tax under a conditional exemption.

9. The non-submission of reports at the time that is required, will cause steps to be taken, as is mandated by the non-proving of the lawful use of the goods.

We will be delighted to provide you with additional explanations, if necessary

Yours sincerely

Name and description of role

Attachments: Appendices 13/F-1 to 13/F-4

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File No.

Appendix 13/F-1 – Procedures for recording and reporting (plants) To be filled in

Declaration

We hereby declare that:

1. All of the goods that have been released by us under a conditional exemption, have been received by us in our warehouse and have been recorded in the records and detailed in the relevant inventory records.

2. All of the goods that have been released under the conditional exemption in the reporting period (except for those that are held by us as inventory and/or which have been sold or transferred into the hands of others with prior approval, have been used and/or sold but only for the exempt objectives, in accordance with the conditions that have been determined for the relevant conditional item or items.

3. The inventory of goods that is detailed in the abovementioned report accords with the inventory lists as "counted physically" for the purposes of the annual financial statements as at and which have been certified by , Certified Public Accountant(s)

4. All of the documents and the records are held by us and ready for your audit, as is required in the procedures.

The Plant's General Manager name and signature The Plant's Chief Accountant's name and signature

The Plant's stamp Date

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Appendix 13/G – Autonomous letter of commitment to indemnify (third party) (Customs Form 151A) To be filled in

(Section 13.3.5)

The State of Israel/ The Ministry of Finance The Taxes Authority in Israel The Taxes Authority in Israel Autonomous Letter of Commitment to Indemnify (third party) Customs Form 151A

To: The Customs Collector

For the use of the CE Unit For the use of the Refund Unit

We the undersigned undertake hereby, jointly and severally, to pay to you the amount that is denoted in the demand for payment, which may be issued by your or on your behalf, within 7 days of the day on which you first written demand is received, and this without placing any duty upon you to first of all demand the clearance of the amount that is denoted in a demand from:

Name of the importer/ exporter Importer/ exporter No. Importer/ exporter's I.D. / Company number

We agree that if we do not pay the amount that is required in the said period, within 30 days the processes that are determined in the Taxes Ordinance will be operated against us.

I/ we undertake to comply with all of the terms of this letter of commitment, even if for any reason whatsoever only I/we will have signed on this letter of commitment.

Names of the parties making the commitment Identity number Position in the Company Address Signature

On / / , there appeared before me the parties making the commitment* whose names are denoted above, after they identified themselves, they signed before me on this autonomous commitment to indemnify.

*If a party making a commitment is a corporation, confirmation from an attorney/ Certified Public Accountant is to be attached, confirming that the persons signing are authorized to make a commitment in its name.

Name of attorney/ Customs Clerk Signature and stamp of attorney/ Customs Clerk ** Clerk from the CE Department oר איק Refund Department in the Customs Office.

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Appendix 13/H – Independent letter of commitment (Customs form 151B) To be filled in

(Section 13.3.5)

The State of Israel/ The Ministry of Finance The Taxes Authority in Israel The Taxes Authority in Israel Independent Letter of Commitment for Approved Institutions Customs Form 151A

For the use of the CE Unit


I the undersigned, under take in the name of , importer No.

(hereinafter: "The Institution), as authorized signatory/ signatories) of the Institution, to pay to you the amount that is denoted in the demand for payment, which may be issued by your or on your behalf, within 7 days of the day on which you first written demand is received, and this without placing any duty upon you to provide a basis or reasoning for your demand.

We agree that if the amount that is required is not paid by the Institution in the said period, within 30 days the processes that are determined in the Taxes Ordinance will be operated against the Institution.

Names of the persons committing in the Institution's name

Identity number Position in the Institution Address Signature

On / / , there appeared before me the persons making the commitment in the Institution's name, whose names are mentioned above, after they identified themselves, and after they had presented confirmation that they are authorized to sign in the Institution's name, they signed before me on this independent letter of guarantee.

Name of attorney/ Customs Clerk Signature and stamp of attorney/ Customs Clerk ** Clerk from the CE Department in the Customs Office.

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Appendix 13/I – Application for an exemption on local purchases (Customs Form 374) To be filled in

(Section 13.3.10)

The State of Israel/ Customs and VAT Department Application for an exemption on local purchases File No. of the applicant for an exemption Customs Form 374 (Version 1) Approval No.

N.B.! The validity of this document will expire at the end of a period of 6 months from the date of its approval

Name and address of the applicant for the exemption

Manufacturer's name and address File No.

A. to: The Customs Collector/ Supervisor I hereby request that you approve for me an exemption from taxes on the goods that are detailed below, under section of the Law. (The Law for the Encouragement of Capital Investments/ the Oil Pipelines Rights Law/ the Customs Tariff/ The Purchase Tax Tariff).

Description of the goods

Measurement units Quantity The price The Tax Mark number Purchase Tax

Total tax (in words):

I hereby confirm that the goods that are detailed above which will be purchased by the abovementioned manufacturer will be held by me. In the invoices the numbers of which are listed as follows: I hereby undertake not to sell and not to transfer the goods to another party and not to use them for other objectives that what is determined in the legislation that I have mentioned above, with in their current form and whether in another form, without receiving the agreement of the Customs Authority in advance and paying the tax that applies to them.

Date Signature and stamp

B. Designated for recording in Conditional Exemption Unit The application was approved on This application is approved based on my authority pursuant to Section of the Customs Ordinance, the Law for the Encouragement of Capital Investments / an Emergency Order (The rate of a compulsory payment).

Signature of the person authorized to approve

C. Designated for recording in the Purchase Tax/ Excise Unit A credit is given under credit voucher No. dated Recorded in the Ledger of Exemptions under No. Signature Signature

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Appendix 13/J – Approval for the customs authority regarding the fulfillment of the terms for the customs item

(Customs Form 381) To be filled in (Section 13.2.4)

The State of Israel/ Customs and VAT Department Confirmation for the Customs Authority No. 68704 Regarding the fulfillment of the conditions for a customs item Customs Form 381 (Version D) (The office's stamp)

To: The Customs Authority

From:

(Family name) (First name) (Position) Pursuant to the authority that is afforded to me lawfully by for the purpose of item to the addition to the Customs Tariff and Exemptions Order, 1937, I hereby confirm that the goods and the quantities that are detailed below and which are intended to be imported by:

Importer's name and address: Import license No. Importer Certificate No. Comments: Country of origin

Fulfill the conditions in the Tariff that is recorded below and marked X: They are not produce in Israel and they do not constitute a replacement for goods that are produced in Israel. They are used primarily for the protection and safety of the employees in industry and production. The equipment is typically for extinguishing fires and rescue. They have been planned for the production of another and unique type, or we have planned that the material that is expected to be

supplied from it in accordance with the pace of the work, are not of the type that is produced in Israel and they do not constitute a replacement for the types that are produced in Israel.

Description of the goods Units Quantity FOB price in foreign currency

1.

2.

3.

4.

5.

6.

7.

Date Signature and stamp

There is nothing in this confirmation and in the classification that is mentioned in it that determines the classification of the goods. The classification will be determined by the Customs Authority. D.M. Jerusalem, 111X50X3 (2.94) 94/95050

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Appendix 13/K – Request for exemptions from customs/ from purchase tax on goods that have been imported for

consumption in Israel (Customs Form 425) To be filled in

(Section 13.3.10)

The State of Israel/ Customs and VAT Department Application for an exemption from customs/ purchase tax File No. On goods that will be imported for consumption in Israel Customs Form 4255 (Version D) Approval No.

Three copies of this form are to be submitted

To: The Customs Collector 1. I request hereby and exemption from customs/ purchase tax on the following goods

The goods Customs Purchase Tax

Number or quantity Description of the goods CIF value The rate The amount The rate The amount

Please attach three copies of full details if there is insufficient space

2. I received the goods that are detailed above: *a) In accordance with bill of loading No. On ship arriving on / /20 *b) By parcel post in accordance with declaration No. dated / /20 3. The goods will be uses: *For providing help without consideration/ *As a main part of the Institution's equipment/ * For the purposes of people who use

the Institution/ * For independent use alone/ * 4. I am requesting the exemption from customs in reliance on item of the Customs Tariff and the

exemption from purchase tax in reliance on section of the Purchase Tax Order (Exemption). 5. Furthermore, I declare hereby that

6. I hereby undertake not to use the abovementioned goods, whether in their current form and whether in some other form, for another purpose than

that which is detailed in section 3 of this application, without receiving firstly the agreement of the Customs Authority. 7. documents are attached hereto.

Full name of the applicant Applicant's signature (Or holder of a power of attorney from the Institution) (Or holder of a power of attorney from the Institution) Address:

Date The Institution's stamp

Approval of the Conditional Exemption Unit This application is approved in reliance on item of the Customs Tariff Date Signature The application was approved on

Approval of the Customs Collector An exemption has been approved that the goods that are detailed above in reliance on item in the Customs Tariff/ section of the Purchase Tax Order (Exemption). The abovementioned goods have been released in accordance with *Import Document / *Passenger's possessions details/ * Postal declaration Number dated * in the customs office/ *in the parcels post The exemption was recorded in Date Signature

Comments by the Auditor: * There are no comments/ * Audit schedule No. has been sent. Date Signature * Please delete whichever is irrelevant, or describe what is required.

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Appendix 13/L – Commitment (conditional exemption) (Customs Form 373) (Section 13.3.10) To be filled in

The State of Israel/ Customs and VAT Department Commitment (Conditional Exemption) Name of the owner of the goods Address Customs Form 373 (Version C) File No.


I declare herby that I am aware that the goods will be imported by me in accordance with

Import license No. on the ship Bill of Lading No. will be released in accordance

with item to the Addition to the Customs Tariff and Exemptions Ordinance, 1937, or in accordance

with under the condition that they will be used for within one year from the day

on which they are released, by the Customs Authority or within any additional period that may be approved by the Director of Customs and

VAT.

And I hereby undertake in order to identify the goods and enable an audit on behalf of the Customs Department:

A. To maintain a separate and accurate record of each and every shipment regarding the location of the goods and regarding the use

of the goods, in accordance with the parameters, the accounts and the lists that have been submitted for their release to the

Customs Office.

B. To submit a report to the Customs Collector in on the said goods and the use thereof on

each

(The timing of the submission of the report)

C. To enable any customs clerk to audit the correctness of the abovementioned records and the reports at any time that this may be

required.

I am aware that if I wish to use the said goods for other objectives than those that are denoted above, I am to give notice of this in advance

to the Customs Collector in , and to furnish agreement from the duly authorized authority for that use and I am to

pay the import taxes that apply on the goods in their use for the other objectives.

Date Signature of the owner of the goods

- 55 -


Appendix 13/M – Request for approval for the transfer of used goods from a hotel to a public institution with welfare and

aid objectives (Customs Form 371) To be filled in

(Section 13.7.7)

The State of Israel/ The Ministry of Finance The Taxes Authority in Israel The Taxes Authority in Israel Application for approval for the transfer of used goods from a hotel to a public institution for welfare and nursing objectives

Customs Form 371

A. Details of the hotel making the request

Name Importer No. Address:

B. Details of the recipient institution

Name: Address:

Engagement and main objectives:

C. Details of the application We the abovementioned hotel, request to transfer the goods that are detailed below, without consideration to the institution the details of which appear above:

D. Details of the import list (Reshimon), pursuant to which the goods were released

List No. Date of the list: / / / /

Date The hotel's stamp The hotel manager's name and signature

Name, signature and stamp of the financial controller of the

hotel/ CPA/ attorney

E. Approval of the Supervisor of the Conditional Exemption Unit

I hereby approve the transfer of the goods that are detailed in Section C above, without consideration – to the institution that is recorded in Section B above for its use and objectives / /

Date Supervisor's name Supervisor's signature and stamp

F. Details of the recipient institution

I hereby confirm the receipt of the goods that are detailed in Section C above, without consideration – and undertake to use them solely and exclusively in the institution and within the context of its objectives.

/ /

Date The institution's stamp The institution manager's name and signature

Name, signature and stamp of the financial controller of the

institution/ CPA/ attorney

The State of Israel The Tax Authority in Israel Customers ...€¦ · Part 13.1 – General ......

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