Israel Tax Authority Faces Surge in Cyberattacks Amid Fake Invoice Crackdown

Since the launch of Israel's 'Israeli Invoices' project, the Tax Authority has experienced a dramatic increase in cyberattacks targeting its systems, according to Tax Authority Director Shay Aharonovitch. Criminal organizations, which previously profited billions from fake invoices, have shifted their focus from physical theft to infiltrating digital systems to steal identities and issue fraudulent invoices. This shift was highlighted at the annual Israeli Accountants Association conference in Eilat, where Aharonovitch detailed the evolving cyber threats and the challenges in combating them.

Earlier this year, Globes revealed that criminals have been hacking into legitimate companies' accounting systems and personal GOV.IL accounts of company officers to embed fake invoices worth tens of millions of shekels within legitimate business cycles. The State Comptroller's recent report confirmed vulnerabilities in the Tax Authority's identification system, enabling attackers to bypass protections, steal business identities, and generate unauthorized invoices without real-time alerts.

Aharonovitch emphasized that while direct breaches of the Tax Authority's systems remain difficult, identity theft is the main issue. He noted new tactics such as individuals presenting forged IDs to obtain personal codes for system access. The Authority operates an advanced 24/7 Security Operations Center and collaborates with external firms and government bodies to enhance defenses. However, manpower shortages limit their ability to fully address the volume of fake invoices.

Data from the Tax Authority shows that in 2025, 15 million invoices totaling 763 billion shekels were processed through the system, with approximately 42 billion shekels in fraudulent invoices blocked, representing 5.5% of total invoices. Weekly, about 1,000 suspicious invoices from 150 different businesses are halted, leading to dozens of investigations. Aharonovitch called for increased staffing, aiming for three daily shifts with 100 inspectors each, which could potentially stop an additional 20-30% of fraudulent cases.

Regarding fiscal policy, Aharonovitch expressed satisfaction that measures taken have kept the budget deficit under control, avoiding unsustainable levels. He acknowledged unpopular tax increases were necessary to boost state revenues but stressed the importance of reviewing the economic impact of reforms like the undistributed profits tax. Looking ahead, he hopes Israel will maintain a deficit below 5% of GDP in 2026, contingent on stable security conditions, and gradually reduce deficits in the following years.