E-Invoicing in Israel

Israel has become one of the first countries in the Middle East to implement a real-time electronic invoicing system designed to increase transparency and combat VAT fraud. Introduced under the economic efficiency law (5783-2023) as an amendment to the VAT law, the reform establishes the Israel invoice model, a framework operated by the Israel tax authority.

Under this new regime, businesses issuing business-to-business (B2B) tax invoices above a specific value threshold must first obtain a unique allocation number from the ITA before sending the invoice to their customer. This number confirms that the transaction has been registered in the tax authority’s system and is a prerequisite for the buyer to deduct input VAT.

The system is being rolled out in stages between 2024 and 2026, started with a pilot phase for high-value invoices and expanding to include nearly all domestic B2B transactions by mid-2026.

Israel’s e-invoicing initiative reflects the government’s wider effort to modernise tax administration, close the VAT gap, and align with international best practices for electronic reporting and digital auditability.

Although the mandate currently applies only to domestic B2B invoices, it sets the foundation for future expansion to business-to-government and cross-border transactions.