Israel Tightens Real-Time Invoice Validation with Lower Threshold Requirement

• Israel has further expanded its CTC regime by lowering the threshold for mandatory invoice validation to NIS 5,000 from June 2026, significantly increasing the number of transactions in scope.
• The allocation number system functions as a pre-clearance mechanism, meaning invoices must be validated by the tax authority before input VAT deduction is allowed.
• The reform primarily impacts businesses using manual or non-integrated systems, requiring them to adopt digital workflows or risk losing VAT deductibility rights.

Article

Israel continues to expand its real-time invoice control system by lowering the threshold for requiring an allocation number on tax invoices.

From 1 June 2026, any invoice exceeding NIS 5,000 (excluding VAT) must receive an allocation number issued by the Israel Tax Authority before the invoice can be considered valid for VAT purposes. [logos-pres.md]

This allocation number acts as a real-time validation mechanism, ensuring that transactions are reported and approved before input VAT can be deducted. Without such number, the customer is not entitled to deduct VAT. [moldova1.md]

The reform represents a further step toward a fully digitized VAT enforcement model, reducing fraud and increasing control over invoice flows.

External links:

• Israel Tax Authority – Allocation number service
• KPMG – Expansion of mandatory e-invoicing model
• gov.il