Your Taxes: Online detailed VAT reporting

By LEON HARRIS
July 21, 2015 22:37
2 minute read.
US dollars and euros banknotes are seen in this illustration photo

US dollars and euros banknotes are seen in this illustration photo. (photo credit: REUTERS)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user uxperience almost completely free of ads
  • Access to our Premium Section and our monthly magazine to learn Hebrew, Ivrit
  • Content from the award-winning Jerusalem Repor
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later Don't show it again

The Israel Tax Authority (ITA) is sending out notices to growing businesses requiring them to report online all their purchases and sales for Israeli VAT purposes. This is known as detailed VAT reporting.

The aim is to enable the VAT Authority to match up most of the purchases in the economy with most of the sales and to pounce on discrepancies. This is pursuant to Amendment 44 to the VAT Law published on February 13, 2014. Here is an overview.

Be the first to know - Join our Facebook page.


Who is affected? Businesses must begin detailed VAT reporting if their revenues in the 2014 tax year or in 2015 to date exceeded NIS 1.5 million.

When is reporting required?
In principle, the detailed VAT return is required within 15 days after the deadline for filing regular periodic (usually monthly) VAT returns. In practice they are invariable filed together electronically within 15 days after the end of the relevant month.

Information required: On the sales/revenue side, detailed VAT returns must disclose every tax invoice issued by the business, every tax invoice that should have been issued, every customs export document, other documents approved by the VAT director and the amounts on each. On the purchase side, detailed VAT returns must disclose tax invoices claimed (i.e., as purchases), customs import documents, other documents approved by the VAT director and the amounts on each.

Mode of reporting: The VAT return must be filed as an electronic document in a format known as PCN 874. Israeli approved accounting programs are able to do so. Foreign accounting programs are not legal in Israel unless approved by the ITA. The filing can be done by the taxpayer at the ITA’s website using a special smart card that identifies the taxpayer. Alternatively, the taxpayer’s accountant or other representative can file the return at the ITA’s online system for professionals known as Shaam.

Comments: The online reporting is designed to standardize reporting and reduce VAT fraud. Transactions must be entered in chronological order and include fussy details such as identity numbers and dates. Various built validation checks can be annoying, especially if there are clerical errors such as slightly wrong identity numbers.

But if this is the price of detecting fictitious invoices and broadening the tax base without raising the VAT rate, so be it.



As always, consult experienced tax advisers in each country at an early stage in specific cases.

leon@hcat.co

Leon Harris is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.

Related Content

Workers strike outside of the Teva building in Jerusalem, December 2017
December 18, 2017
Workers make explosive threats as massive Teva layoff strikes continue

By MAX SCHINDLER