As we progress through 2024, Israel’s journey towards implementing a comprehensive clearance regime is moving forward, with critical milestones being met and others on the horizon. Despite the complexities and challenges inherent in such an ambitious project, the Israeli Tax Authority (ITA) remains committed to its timeline, with businesses in Israel preparing for the upcoming changes.
Pilot Phase Underway
Israel's e-invoicing pilot phase officially commenced on January 1, 2024. This initial phase targets invoices exceeding NIS 25,000 (~EUR €6,100) and is a crucial testing ground for both the ITA and businesses. During this period, the ITA will assess the system’s functionality, gather feedback from participants, and make any necessary adjustments before the regime's broader application.
To comply, businesses must ensure that their invoicing systems are capable of generating and transmitting invoice data in real-time. Upon submission, the ITA will provide an allocation number which must be included on the final invoice and in the VAT report. Failure to meet these requirements could result in delays or rejection of invoices, impacting cash flow and compliance status.
Technical Updates and Industry Collaboration
A key obligation under the new regime is the technical integration of business systems with the ITA’s e-invoicing platform. Businesses must ensure that their accounting software can interface with the ITA’s API to submit invoices in real-time.
In response to feedback from software providers and businesses, the ITA has released a number of updates to the "Israel Invoice Model Description - API's" document. These provide clarification on several technical aspects, including data transmission protocols and integration guidelines, aimed at smoothing the implementation process.
Looking Ahead To Full Implementation
As the pilot phase progresses, attention is shifting to the broader implementation phases. The ITA remains on track to gradually lower the invoice value threshold, with the next major milestone set for January 2025, when the threshold will drop to NIS 20,000. Businesses should be aware that the invoice threshold will decrease incrementally each year until it reaches NIS 5,000 by January 2028. This means that over time, more and more transactions will fall under the mandatory e-invoicing regime, expanding the scope of compliance.
Businesses should start preparing now by reviewing their invoicing systems, ensuring they are scalable and flexible enough to handle the increasing volume of e-invoices.
Distribution and Record-Keeping Responsibilities
Once an invoice has been approved and the allocation number has been received, businesses must include this number on the invoice and distribute it to the relevant parties. Even with the shift to a clearance model, the obligation to maintain proper records remains. Invoices must still be distributed in PDF format (with a digital signature) or on paper to ensure that all documentation is compliant with existing regulations.
Stay Informed
As Israel moves forward with its clearance regime, we are committed to keeping you informed of any significant developments. We will continue to provide updates on the ITA's progress and offer guidance on how to navigate the changing landscape.
For those operating in Israel, now is the time to ensure your business is prepared for the changes ahead. Stay tuned for further updates and insights as we continue to monitor the evolution of Israel’s e-invoicing journey.
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Stanislava has a vast background in accounting and finance, which transitioned her to a role in e-invoicing and tax compliance with Unifiedpost Group in 2020. She studied Industrial Management, which provided her with a comprehensive understanding of financial, managerial, and engineering sciences and processes. Stanislava is fluent in four languages and has experience working with many international companies all over the globe.
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