From 4% to 100%: AI now checks every tax return
On 9 August 2026 it was reported that the Israel Tax Authority is moving from enforcement based on sample checks to data analysis built on artificial intelligence. Instead of a sample of returns, systems that cross-reference data in real time and flag mismatches and non-reporting. Work that took months of skilled staff time now runs in minutes.
The figures came from Tax Authority director Shay Aharonovitch, at the Eli Horowitz Conference for Economics and Society in June. The target is checking 100% of returns, against the 4% scanned today. At the same event he gave a result from a cross-check already run: "We compared the capital declarations we have in our systems to other reports we have and found a gap of 20 billion shekels." The 2026 collection forecast was revised from ₪540 billion to ₪560 billion.
Why this reaches a small business
An automated cross-check is only worth the data on the other side of it, and over the past two years that data has grown sharply. The allocation-number requirement on a tax invoice came down in stages: ₪25,000 in January 2024, ₪20,000 in January 2025, ₪10,000 in January 2026, and since 1 June 2026 it applies to every invoice above ₪5,000 before VAT. That final threshold arrived about two and a half years ahead of the original plan.
In practice the Authority now holds transaction data at the level of the individual invoice, at the moment it is issued rather than after the fact. Its own figures put roughly ₪34 billion of fictitious transactions blocked since the programme began, ₪6.1 billion in VAT value on invoices stopped between the start of 2025 and May 2026, and about 1,000 suspect invoices from some 150 businesses blocked each week. Finance Minister Bezalel Smotrich credited the reform with ₪16 billion in added state revenue.
The layer being added now is not more collection. It is the ability to compare what has already been collected against the annual return, the VAT return and the capital declaration, without a person opening the file and without the file being picked in a sample.
The date running alongside it
The voluntary disclosure procedure was published as a temporary order on 25 August 2025 and is valid until 31 August 2026. It lets anyone who did not properly report income or assets, including gains on digital assets, settle the matter on their own initiative. In exchange for full and truthful disclosure the Authority undertakes, in coordination with the State Attorney's Office, not to open criminal proceedings. Applications are filed on an online form only, and are routed either to a green track, meant for cases where the amounts involved are relatively small, or to the regular track, which ends in an assessment agreement with the assessing officer.
One difference from earlier procedures is worth noting. This one has no anonymous track. The approach is identified from the first moment.
Two threshold conditions disqualify an application. First, that the Authority already holds information relating to the request, including about a spouse, companies the applicant controls, or partnership accounts. Second, that a police investigation into the applicant is under way. Both are assessed as at the filing date. The more data the systems cross-reference, the harder "the Authority has no information" becomes to satisfy, and that is the tension between the two halves of this story.
Take-up so far is modest. As of 21 July, 383 applications had been filed, covering roughly ₪877 million of capital and ₪57 million of tax. 84 of them concerned digital currencies, with ₪210 million of capital and ₪18 million of tax.
What to do about it
If your reporting is in order there is no new obligation here and no new form. The one action is to confirm the documents behind every line of the return exist and are accessible, because automated checking produces more clarification requests, not fewer, and they land on small gaps a human reviewer would not have bothered with. The document retention guide sets out how many years each type has to be kept.
It is also worth reconciling the invoices you actually issued against what was reported, cancelled invoices and credit notes included. That is the easiest cross-check of all to automate.
If there is unreported income, that is a conversation with a tax lawyer rather than a decision to make alone, and it has a date on it. No extension of the temporary order beyond 31 August has been announced.