Following the "Iron Swords" war, and in light of the understanding that in these difficult days there are businesses that require additional time to complete the necessary technological development in order to meet the requirements of the law, the Israel Tax Authority decided to allow the deduction of input tax through a tax invoice even without an allocation number, and this until March 31, 2024.

The amendment to the Value Added Tax Law in connection with the allocation of tax invoice numbers is intended to help combat the phenomenon of fictitious invoices. Under the law, it was determined that as of January 1, 2024, the Israel Tax Authority will issue, through an online system, allocation numbers for tax invoices, which will be required as a condition for deducting input tax in transactions over the ceiling set by law (NIS 25,000 for 2024), and in accordance with the format set out in the law.

In recent days, due to the state of war in which the State of Israel is mired, the Israel Tax Authority decided to promote a number of measures to postpone deadlines and provide various relief to businesses. Within this framework and in these exceptional circumstances, the Israel Tax Authority decided that tax invoices bearing a date between 1.1.24 and 31.3.24 will be allowed for deduction as input tax even without an allocation number, due to their recognition as "other document".

For the subject of the detailed report for VAT (file 874PCN), it is clarified that despite the definition of the invoices as mentioned as "other document", it is required to continue to report them as a regular input, and not to classify them in the detailed report as another document.

However, in light of the fact that the Israel Tax Authority is already prepared to implement the law, businesses that have completed the technological development and request allocation numbers starting January 1, 2024, will receive an allocation number and will even be eligible for accelerated processing of VAT refunds.

The Israel Tax Authority reiterates that the new identification processes and the authorizations required to implement the amendment to the law have an impact on other tax systems that need to be streamlined and improved the various interfaces with the Israel Tax Authority (direct connection to Sham using the various APIs). Therefore, we recommend promoting these processes regardless of the update detailed in this document.