3-month delay on 2024-28 phased introduction of B2B centralised pre-clearance e-invoicing to tackle fictitious invoice fraud
The Israeli Ministry of Finance is progressing towards a centralised Continuous Transaction Control (CTC) based electronic invoicing regime. However, due to the current crisis, the launch has been put back 3 months from 1 January to 1 April 2024.
The aim is to tackle the large ‘fictions invoice’ fraud problem, often used by criminal gangs to launder money. The new requirement to obtain a unique digital sales invoice number – Allocation Number – from the Ministry prior to issuing an e-invoice will be for a 1-year 2024 pilot. However, the Ministry will be able to extend this depending on the success.
The Ministry is proposing a 5 phased introduction from a voluntary January 2024 launch of the threshold for eligible invoices to be submitted to the Tax Authority in real-time for validation and allocation of a unique digital invoice number. Without this number, it will not be possible to deduct input VAT. The invoice thresholds will be applied as follows:
- Jan 2024: voluntary
- April 2024 – above NIS 25,000 (approx €6,250 or USD 6,710)
- Jan 2025 – above NIS 20,000
- Jan 2026 – above NIS 15,000
- Jan 2027 – above NIS 10,000
- Jan 2028 – above NIS 5,000 (approx €1,300 or USD 1,600).
Pre-clearance model to combat fictitious VAT invoices
The aim is to tackle the huge fraud problems around fictitious B2B VAT invoices, used by companies as deductions against their own VAT liabilities. The Tax Authority believe this costs the country billions in lost revenues. A pre-clearance model would give the tax authorities an advanced opportunity to cross-check any submitted invoice with the original supplier’s records.
The Ministry of Finance is considering a pre-clearance model, along the lines of Italy or Chile. The EU VAT in the Digital Age proposal for Digital Reporting Requirements is being progressed for 2028.
