The landmark Micro Dealer (Osek Zeir) reform allows small business owners with turnover under 120,000 ILS (up to 122,833 ILS indexed) to deduct a flat 30% expense allowance without collecting individual expense receipts.

What Does It Mean to Be an "Osek Zeir"?

Under the new tax track, sole proprietors under the 120,000 ILS ceiling can opt out of archiving hundreds of receipts for fuel, office supplies, and refreshments. The Tax Authority automatically recognizes 30% of total gross revenue as deductible expenses.

Osek Zeir vs Standard Osek Patur: Comparison Table

Feature Osek Zeir (Micro) Osek Patur (Exempt) Osek Murshe (Licensed)
Turnover Ceiling Up to 120,000 ILS Up to 120,000 ILS Unlimited Turnover
Expense Recognition Flat 30% Standard Expense Deduction Actual Documented Expenses Actual Documented Expenses
Receipt Documentation Exempt from expense receipts Must keep all receipts Must keep all receipts
Tax Filing Method Simplified Online Declaration Annual Form 1301 Return Annual Form 1301 Return

Calculation Example:

For a freelancer with 100,000 ILS annual turnover, 30,000 ILS (30%) is automatically deducted as business expense, leaving 70,000 ILS net profit taxable under progressive income tax brackets (5%, 10%, 14%, 20%, 25%).

Who Benefits Most From This Track?

Low-overhead service providers—such as private tutors, graphic designers, digital consultants, and content creators whose real expenses are below 30% of revenue—gain massive tax savings and zero administrative burden.

Who Should Avoid This Track?

Businesses with high operational costs (such as physical retailers, craftsmen, or service providers spending 40%, 50%, or 60% of revenue on materials and stock) should avoid Osek Zeir, as flat 30% recognition would artificially inflate taxable net profit.

When Does the Law Prohibit Osek Zeir Status?

The law explicitly forbids restricted liberal professions (lawyers, CPAs, doctors, real estate agents) and individuals employing workers or renting commercial premises from using the Osek Zeir track.