Stay Compliant in Israel with SAP Document and Reporting Compliance, Electronic Invoicing solution

[Miri_Shimony]

Electronic invoicing, also known as e-invoicing, is gradually gaining acceptance worldwide, including Israel.

The Finance Committee of the Israel government approved for second and third call the plan to reduce the use of fictitious invoices, promoted by the Minister of Finance, and the Tax Authority as part of the economic plan for 2023-2024. As part of the plan, the Tax Authority will operate a digital control system on transactions between dealers, by assigning allocation numbers to invoices.

In accordance with the approved plan, at the beginning on January 1, 2024, the Tax Authority will assign a unique number online to tax invoices whose value exceeds NIS 25,000. The threshold will decrease in the subsequent five years, so by January 1, 2028, the threshold will be NIS 5,000. From the beginning of the implementation of the program, there will be an obligation to obtain an allocation number from the Tax Authority for invoices in the prescribed amounts. Tax invoice without allocation approval will not be allowed to deduct the input tax.

Following the situation Israel, there are businesses in Israel that will require additional time to comply with the requirements of the new eInvoicing regulation. Hence, the Tax Authority decided to allow the deduction of input tax through a tax invoice without an allocation number, until March 31, 2024. However, as the Tax Authority is already prepared for the implementation of the law, customers that are ready in time and will be requesting allocation numbers starting on January 1, 2024, will be receiving the allocation numbers and will even benefit from speeding up the handling of VAT refunds.

SAP’s solution to support electronic document processing and statutory reporting requirements globally is SAP Document and Reporting Compliance. To fulfill the Israeli e-invoicing regulation, the solution is delivered as part of the SAP Document and Reporting Compliance solution:

Over the last few months, the SAP Globalization Services and localization team have been working diligently to release a localized version that enables SAP customers to comply with Israel's e-invoicing regulation.

SAP solution for Israel's Electronic Invoice is now available in SAP Document and Reporting Compliance

  for SAP S/4HANA / SAP S/4HANA Cloud Private Edition / SAP ERP. 

If you are already using the electronic document processing framework for other countries, ensure that you have implemented all prerequisite SAP Notes necessary for the Israel solution. If you are implementing the document processing framework for the first time, we recommend you to start the implementation even before the full completion of the development of the Israeli requirements.

The SAP Document and Reporting Compliance solution is supported in SAP ERP, SAP S/4HANA, and SAP S/4HANA Cloud Private Edition for the new e-invoicing regulation for Israel, covering FI, SD and RE-FX as source documents. In SAP ERP, the following minimum SP levels are necessary: SAP ERP 6.0 - Enhancement Package 6 SP12, Enhancement Package 7 SP05, Enhancement Package 8 (no minimum SP level). In SAP S/4HANA, the minimum release is 1709.

For additional information, please refer to our SAP master Note 3392197 - Electronic Document Processing for Israel: Implementation Overview.

For a troubleshooting guide and answers to frequently asked questions to help you in the implementation process, please refer to SAP Note 3431462 - Electronic Document Processing Israel Troubleshooting Guide

It's crucial to stay compliant with new regulations. To ensure success, stay updated on any changes and comply accordingly with use Announcement of Legal Changes or Regulatory Change Manager where you can find the latest status of upcoming regulations, including Israel:

For the Israeli Electronic Invoicing regulation, please refer to the following to get the latest updates:

• SAP S/4HANA / SAP S/4HANA Cloud Private Edition / SAP ERP: link
• SAP S/4HANA Cloud Public Edition: link

If you have any questions or concerns, please feel free to contact us for more help.
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