Tax Authority Launches Invoice Certification Program

By Aryeh Stern

The Tax Authority on Sunday launched its invoice certification program, finally kicking off after multiple delays due to the ongoing war. This computerized scheme aims to effectively tackle the issue of fictitious invoices. Through real-time digital control, the Tax Authority will now assign approval numbers to invoices upon issuance.

Dubbed “Israel Invoices,” the program sets a threshold where input VAT on invoices exceeding NIS 25,000 can only be offset against output VAT if accompanied by an allocation number. (Input VAT refers to the VAT a business pays on purchases, which can be deducted from the VAT collected on sales and paid to the Tax Authority as output VAT, contingent upon possessing a valid invoice.) The initial NIS 25,000 threshold will gradually decrease to NIS 5,000.

Fictitious invoices have been labeled a national epidemic by the Tax Authority, leading to annual tax evasion in the billions of shekels. This new method, certifying business-to-business invoices in real time, was a flagship initiative of the former Tax Authority director, Eran Yaacov, in the battle against the black market.

Businesses with up-to-date accounting systems can automatically obtain allocation numbers, while others can request them through a specialized application developed by the Tax Authority.

Yaron Gindi, president of the Institute of Tax Consultants, emphasizes the significance of the Israel Invoices model in combating the black market, believing it will fortify Israel’s economy. He states that its implementation will instill confidence in business owners regarding the legitimacy of invoices, having been scrutinized by the Tax Authority. Gindi highlights cases where honest businesses unwittingly receive fictitious invoices, facing unwarranted criminal accusations and financial penalties. He asserts that the new program will safeguard law-abiding businesses, making it arduous for fictitious invoice perpetrators to defraud the public coffers.