Opening a Tik Osek Patur at Maam

As is the case with many bureaucratic hurdles in Israel, doing this is less scary than you may have been led to think.

Why Osek Patur?

If you are just starting out your business, do not expect significant expenses, and do not expect more than around 5,000 NIS a month income (actually, 60,000 a year), then you may prefer to open as an Osek Patur. The benefit is simply that you are not required to pay VAT monthly. Ultimately, you will hopefully graduate to Osek Murshe status (as a friend of mine once said, he loves paying a lot of tax; that means he’s making a lot of money!) but meanwhile, one less office to interface is worth it imho.

What To Expect

About an hour’s wait in the office

No wifi in the waiting room

Fill out a form (I’ll try to get a copy of it and scan and post it here)

Non-standard form fields

<snip> I will post this and revisit it when I get a copy of the form. Unfortunately, I neither photocopied the form I submitted nor got a copy or processed report of it (as I probably expected, silly me!), so it’s a little hard for me to recreate it from memory.

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7 Responses to Opening a Tik Osek Patur at Maam

  1. Tamar Schriger says:

    Gidon-
    the mas hachnasa office at center 1 is
    everything you described the MA one to be– and it’s for us settlers; I’d
    been going to kanfei nesharim for years until a neighbor here told me about
    the cntr 1 office (he works there!) One of the most important lessons one
    has to learn in this country is to OPEN one’s mouth and ears–talk and
    listen–you learn a lot that way.
    Tamar

  2. Gidon Ariel says:

    Thanks Tamar!

    Today I went to Center 1 – I hope to blog about that wonderful experience ASAP.

  3. Rivka says:

    Your description of osek patur vs. osek mursheh is not accurate, IMO. No one “pays” VAT – an osek mursheh must collect VAT from his customers, that is, add VAT on to his prices, and then pass that on to the government. He is just a middle man. It is also not a big deal to figure out if you have a computer program to print out receipts – and you just pay it right along with your income tax and Bituach Leumi. If you don’t have a program or a bookkeeper to do it for you, then I agree that it’s a little more of a pain to figure out the VAT, but not too terrible. The real advantage of being an osek patur is that you can charge lower prices, since you don’t have to add on VAT, which makes your prices more competitive and attractive to your customers. The disadvantage is that you can’t get returns for the VAT that you paid for any of your business expenses. For example, I pay $400 rent a month + VAT. I just take the VAT off the VAT I collected from my customers, so I actually have less expenses as a result. If I’ve spent more money on VAT than I’ve collected, I file for a return and get it fairly quickly. Out of all the government offices I have to deal with, VAT is really the best of the lot.

  4. Gidon Ariel says:

    Hi Rivka,

    I agree with what you wrote. Different solutions for different situations.

    I was told at VAT that I cannot just print out receipts (I assume you are talking about a certified program, not just Word).

    I guess that with monitoring of my expenses and income, I can figure out if it is worth my while to switch to Mursheh.

    Thanks for commenting! Keep in touch!

  5. [...] Opening a Tik Osek Patur at Maam March 2008 4 comments 4 [...]

  6. jacob says:

    Gidon, thanks for your blog, it’s really helpful! I am at the point of making my decision now – patur or murshe. and before i go to a tax advisor i’d like to know as much as i can. Can you please advise, whether osek patur can have deductibles like partial car expenses, gas, electricity, office rent, etc? I do not mean VAT, but reduction of the final profit i’ll get to pay taxes from? Or the taxes are calculated from my “brutto” income?

    Someone also said, i cannot do web site support and development as osek patur, even if i get less than64k a year. Is it really so?

    I’ll really appreciate your help.

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