How has Israel’s B2B e-Invoicing changed?
The mandatory implementation of B2B e-invoicing, known as the Israel invoice model, received a postponement. Shifting the launch from April 2024, the new launch date announced by the Internal Revenue Service (IRS) is 5 May 2024. This delay was given out of consideration for the business owners who have yet to complete the technological preparation for ensured compliance due to the ongoing war. The B2B e-invoicing system is a crucial step in the fight against fictitious VAT invoices.
Israel’s B2B e-invoicing pre-clearance model will run through an online system, which will issue an Allocation Number for VAT invoices. This number acts as a crucial verification tool, allowing tax authorities to cross-check invoices with the original supplier’s records. Effectively shutting down avenues for fraudulent activity. As of January 2024, this allocation number will be required as a condition for deducting input VAT above the threshold established by law. In 2024, this will be for transactions over NIS 25Â 000.
A one-year pilot will run, until January 2025, to test the requirement to obtain an Allocation Number from the IRS prior to the issuing of an e-invoice. Additionally, this pilot will confirm the requirements for using certified representatives to obtain approved Allocation Numbers.
The originally planned phased rollout, starting with voluntary participation in January 2024 and gradually lowering the threshold for mandatory involvement until January 2028, will be revised considering the delay. The specific details of the revised timeline are still pending an official announcement from the Israeli government. However, businesses can expect a similar phased approach with adjusted dates.
Why the delay?
This delay, while seemingly an obstacle, ultimately serves as a strategic move to ensure the successful and secure implementation of the system. By providing businesses with more time to prepare and rigorously testing the pre-clearance model, the government aims to create a robust system that not only streamlines B2B transactions but also significantly curbs fraudulent activities, leading to increased tax revenue and a better economic landscape. Businesses and stakeholders are advised to stay updated on the official announcement and revised timeline to ensure smooth integration into the new e-invoicing system. Subscribe to our newsletter to stay up to date.
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