Israel’s invoice-tracking system brought in billions, but tax fraudsters are getting more sophisticated

A short State Comptroller’s report says Israel’s “Israel Invoices” system has become one of the most important tax-collection reforms in recent years, but it has also exposed how far criminals are willing to go to evade taxes. The comptroller says the Tax Authority must broaden its fight against fake invoices with additional legislation, not rely only on the new system.

The platform, which began operating in January 2024, requires prior approval from the Tax Authority before businesses can deduct expenses or reclaim VAT. At launch, approval was needed for invoices on transactions of 25,000 shekels and above. In June 2026, the threshold was lowered to 5,000 shekels and above.

According to the comptroller’s data, the system approved invoices worth 763 billion shekels during 2025, while rejecting 62,000 invoices totaling 42 billion shekels. If those invoices had been approved, state revenue would have fallen by about 7.1 billion shekels in VAT alone, and another 10 billion to 15 billion shekels in corporate tax and income tax. The report says the system is clearly generating billions for the state, even if some fraudsters may have found other ways around it.

The report also says criminals have moved into more serious offenses, including identity theft and cyber intrusions. In the cases examined, the Tax Authority only acted after businesses complained about fake logins, and only after the impersonators had already received invoice numbers. The authority said it is trying to prevent such incidents and now blocks the system when identity theft is suspected.

The comptroller says another weakness is that enforcement has focused on the side issuing fake invoices, while businesses that buy them should also face harsher penalties. The Tax Authority says the next stage will include legislative changes, including monetary sanctions on company officials, not only on companies. The report also warns that fraudsters can quickly open new companies or change shareholders, allowing blocked entities to reappear.