This morning, after several delays because of the Swords of Iron war, the Israel Tax Anthony’s computerized scheme for combatting the phenomenon of fictitious invoices came into effect. The Tax Authority will operate a digital control system for transactions, in real time, through the allocation of approval numbers for invoices when they are issued.
Under the program, called "Israel Invoices", from today, May 5, 2024, input VAT on an invoice over NIS 25,000 will only be offsettable against output VAT if the invoice bears an allocation number. (A business can deduct the value added tax it pays on a purchase for the purposes of the business - input VAT - from the VAT it collects on sales and pays to the Tax Authority - output VAT - only if it has a valid invoice for the purchase.) The NIS 25,000 threshold will gradually be reduced to NIS 5,000.
Fictitious invoices have become a national plague, according to the Tax Authority, and result in tax avoidance amounting to billions of shekels annually. The new method, which will certify business-to-business invoices in real time, was a flagship program of the previous director of the Tax Authority, Eran Yaacov, in the fight against the black economy.
An allocation number can be obtained automatically from a business’s accounting system if it is up to date. Otherwise, a number can be requested via a special application developed by the Tax Authority.
"The Israel Invoices model is an important tool in the fight against the black economy, which, from a general point of view, will strengthen Israel’s economy," says Yaron Gindi, president of the Institute of Tax Consultants. "Implementation of the model will provide confidence to the business owners who receive invoices that the invoices are from a reliable source and have been examined by the Tax Authority. There are very many cases in which honest business owners receive fictitious invoices unknowingly and innocently,, and they are the ones accused of criminal offences and pay financial and other penalties. The new program will protect law-abiding businesses and make it difficult for the fictitious invoice criminals to harm the public purse."
Published by Globes, Israel business news - en.globes.co.il - on May 5, 2024.
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