Tax Authority Aims at Fictitious Invoices, Cryptocurrency

Israel’s Tax Authority will continue its efforts to rid the country of the scourge of fictitious invoices, which accounts for a large chunk of the black economy, despite failing to incorporate it in the new state budget, Globes reported on Monday.

Tax Authority director Eran Yaacov told the financial daily that “Part of the battle against the black economy is the ability to shift towards prevention. Technology is the way. For one reason or another, they did not allow us to proceed with the Israel Invoices plan. We shall continue to fight to introduce it, and there’s no other way to deal with this cancerous phenomenon.”

Tax officials have been hoping to capture billions of shekels in tax revenue by implementation of the “Chilean model.” This would require any business owner issuing an invoice of over 5,000 shekels to obtain immediate approval online from the Tax Authority at the time the invoice is issued.

It will not be possible to offset the VAT on an invoice that has not been approved. The Tax Authority’s aim is to be present when money is transferred between businesses and to prevent fictitious invoices. As of now, the plan has been blocked, but they intent to reintroduce it in the Knesset winter session.

Cryptocurrency was another of the Authority’s main targets that was culled from the budget bill. It wants to impose stringent reporting requirement on players in the cryptocurrency market (mandatory reporting of any holding of virtual currency worth NIS 200,000 or more, or that cost NIS 200,000 or more to buy)

Yaacov pointed out that even without such mandatory reporting, the Tax Authority will catch up with anyone who seeks to evade tax through cryptocurrency.

“With or without legislation, I tell you and the public as well, we’re there with the most advanced technology for dealing with blockchain. We have brought several breakthrough cases in contending with the digital currencies. Our ability to reach those who choose to get smart with the law is of an international standard. Don’t put the Tax Authority to the test,” he said.