As of June, when invoicing a client for more than $2,000, a digital invoice must be issued. Before the invoice is issued, the vendor must ask for an “authorization number” from the Tax Authority to bill for the 18% value-added tax. The authorization number only lasts for a week or two, at which point the vendor needs to ask for a new one. To get a new one, you need to provide two proofs of identity, such as your passport number and its validity date, the issuing date of your ID, your credit card number, and/or your VET number. I do not know what a “VET” number is.
But I do know my passport number and the date my ID was issued.
Nevertheless, the website did not recognize any of the details I entered, and after three attempts I was blocked and told to call the Ministry of Finance helpline. That took two hours of waiting on the line. I was told to “drop into” the local tax office to get a new authorization code, or wait ten days, at which time I would get a video call to show my ID.
I explained that there is no parking at the tax office, and that waiting for a video call won’t work because I am always busy and they will probably call just once… and I don’t carry my ID in a rucksack on my back.
And I asked, with all this bureaucracy, how am I going to bill? The broken system was actually preventing me for billing for my work! Unless I devoted a few days to getting a code…taking what we call Bus # 11-ie: walking and sweating it out the digital moat blocking me off from doing business.
Then came the Middle Eastern answer from several people who was facing the similar problem: “This is a very common problem. The new system doesn’t work well; it was designed with safety, not usability in mind. In the meantime, the only bypass is two non-digital invoices for half the amount each. Otherwise you cannot do business”.
And there it was, in all its glory: a poorly defined system encouraging a workaround. A half-assed, half-baked system, alongside smart people helping you adapt to the very system set in place.
This is a mini guide to navigating Israel: too much dysfunctional digitization, and plenty of people designing workarounds that help bypass the system.
The system may be good system in a country where so many people evade taxes-but it needs to work!
