Chapter A (Purpose of the Law) of the Economic Plan Bill (Legislative Amendments for Implementing Economic Policy for the 2025 Budget Year), 5785-2024

The bill abolishes the status of "VAT group" for VAT reporting purposes. This means that transactions between companies within the same group, which previously did not require separate reporting, will now be subject to reporting. According to the Tax Authority, this is intended to prevent tax manipulation and increase state revenues. The Manufacturers Association opposes the abolition, arguing that the VAT group status was intended to simplify reporting for transactions between dealers, as is common in many countries. They claim that abolishing the status will cause high operational costs, burden companies' cash flow, require expensive adjustments to computer systems, and significantly increase the number of invoices and reports that must be generated and processed. Additionally, they note that even today, every dealer reports their transactions separately, including internal ones, on an annual basis, which allows the Tax Authority to conduct oversight. The Manufacturers Association believes that the Tax Authority's goal can be achieved through increased supervision rather than by adding a bureaucratic burden, especially during a challenging economic and security period. They call for the proposal not to be advanced within the framework of the budget laws.

Source: חומר רקע