Israel’s Tax Authority is proposing to introduce electronic VAT invoicing. There would be an invoice threshold of NIS 5,000 (approx €1,300 or USD 1,600). This would apply to all B2B transactions about the invoice threshold. The Tax Authority estimated only 15% of invoices pass this hurdle.
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 Chiles. The EU e-invoicing proposal is being progressed for 2014. This would mean invoices only take on full tax recognition, including the right to deduct, once the Tax Authority has live verified and certified the invoice.
Likely to follow Chilean e-invoice model
A similar plan was put forward in 2016 to follow the Chilian model. This requires taxpayers to work through e-invoice certified partners. Draft invoices are passed to them, they would transmit live to the Tax Authority for approval and return. The agent could then forward the invoice to the customer.
However, political difficulties in forming a government mean that the plans my face a long delay in implementation. Other plans include VAT on foreign digital services and a proposal to withdraw low-value import VAT exemption on e-commerce sale of goods.
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