Israel introduces its electronic invoice clearance model

The Ministry of Finance of Israel has published the country's economic plan for the years 2023 and 2024. One of the main objectives of the program is to combat fraud and tax evasion due to the use of illegal invoices in the country to avoid tax payments.

To achieve this, Israel proposes a model for sending invoices in electronic format and in real-time to the tax authority, known as CTC. The tax authority will validate the received invoices before they can be sent to the final recipient. This validation model is very similar to that of other countries such as Mexico or China.

How does electronic invoicing work in Israel?

Currently, electronic invoicing is voluntary and applies to B2B invoices between companies. However, the details of the functionality of the model and the definitive implementation timeline have not yet been defined.
Invoices exceeding 5,000 NIS must be reported to and approved by the Israeli Tax Authority. The tax authority will assign a unique identifier and verify the data to approve or reject the invoice.

The transaction date, invoice number, company information of the issuer and recipient, and the invoice amount excluding VAT must be shared with the Tax Authority.

Once validated by the tax authority, it will be returned to the seller so that they can deliver it to the buyer.

The implementation of an e-Invoicing solution will allow the recipient to verify the received invoice data to ensure the authenticity of the document.