Israel's Ministry of Finance has issued several proposed tax measures as part of the 2021-22 Budget. One of the key proposals is for imposing VAT on foreign digital service providers, which was previously proposed in 2016. As with the previous proposal, foreign suppliers of digital services would be required to register and account for VAT on supplies made to Israeli consumers at the standard VAT rate of 17%. The requirements would also apply for foreign communications, radio, and television service providers. In addition to foreign service providers, VAT requirements would also apply for supplies of low-value goods by foreign suppliers to Israeli consumers via online stores.

Another important proposal in relation to the distribution of so-called "trapped earnings" that have been exempted under historical tax regimes and are subject to the claw-back of corporate income tax upon distribution. To encourage the distribution of such earnings, a discount of up to 40% of the tax payable is proposed for distributions made from 1 January to 31 December 2022. After this period, the provision allowing companies to elect the type of earnings they distribute would be repealed, with all distributions then treated as made on a prorated basis from all types of earnings and taxed accordingly.