Money cash Shekels currency 521.
(photo credit: Reuters)
On November 19, the Knesset Finance Committee approved a number of measures in
the oddly named Bill for Deepening Collection and Increased Enforcement (more
efficient means of collecting and reporting). These measures will become law
after a second and third reading in the Knesset, which is usually a
The bill aims to reinforce the ability of the Israel Tax
Authority to deal with the black economy and tax evaders.
What are the
expected new measures? First, businesses with annual revenues of NIS 1.5 million
or more will have to file detailed online VAT returns from the beginning of
2014. This catches most businesses in the economy.
Currently the annual
revenue threshold is NIS 2.5m.
This means electronic filing of every
single sale and purchase of the business.
It is all done by approved
accounting software, but it enables the ITA to embark on an enormous matching-up
process and to detect discrepancies between virtually all reported sales and
reported purchases within the economy. There is a gap regarding imports and
exports, as foreign businesses don’t normally report their side of the
transaction to the ITA, only to their own tax authority.
penalty for delays in filing an online return will be “only” NIS 600 rather than
the originally proposed amount of NIS 1,700.
These measures were accepted
despite fierce criticism from professional bodies that complained about their
broad scope. They also complained that work was being shifted onto the tax
representatives’ shoulders. The ITA replied that this was good for efficiency.
About 15,000 businesses will have to start online reporting.
consult experienced tax advisers in each country at an early stage in specific
email@example.com Leon Harris is a certified public accountant and
international tax specialist at Harris Consulting & Tax Ltd.