Online VAT: daily settlement and same-day refunds
On 9 August 2026 it emerged that the Tax Authority wants VAT collected at the moment of the transaction instead of on the 15th of the month. The days that followed brought the mechanics, and they change far more than the payment date.
The plan, called Israel Invoice 2.0 or online VAT, has three parts.
The first is when the liability arises. VAT would become due when the money actually lands in the bank account, not when the invoice is issued. That corrects something dealers live with today: give a client net 60 and you hand the state the VAT long before you see the cash.
The second is daily settlement. The Tax Authority's system would total the VAT collected against the VAT paid on inputs each day and move the difference. A business in a refund position gets the money into its bank account the same day, instead of waiting for the reporting cycle and whatever review follows it.
The third is splitting the payment. The buyer sends the supplier the net price only, and remits the VAT directly to the Tax Authority online. The system issues a digital payment approval number, and the invoice can be produced only on the strength of it. The state's money never passes through anyone's pocket, so it cannot go missing on the way. The estimate behind the plan is a loss of about 15 billion shekels a year to fictitious invoices. For scale, VAT collection in 2024 came to 143.3 billion shekels, 30.2% of the state's tax revenue, with forecasts of 145.5 billion for 2025 and 167.2 billion for 2026.
What it does to your cash flow
That depends on which side of the ledger you sit.
A business that collects more VAT than it pays on inputs loses the float. The weeks between issuing an invoice and the 15th of the following month are free working capital, and they disappear. Tying the liability to receipt of payment softens the blow: no VAT on an invoice nobody has paid yet. If your clients take a long time to pay, you come out ahead.
A business that sits in a refund position gains outright. Buy equipment, export at zero rate, run inputs larger than sales, and today the money comes back after a full reporting cycle and sometimes after a review. Under daily settlement it comes back the same day. If you are not sure which side you are on, input VAT is the place to start.
What is still open
The big unanswered question is who actually executes the transfer and the netting. Private bookkeeping and invoicing software, or the payment providers, meaning the banks and the credit card companies. That decision determines who your transaction routes through, who owns the interface, and most likely who charges a fee for it.
Beyond that, the plan needs primary legislation. There is no start date, no temporary order, and no new form. Nothing changes in this month's filing or this year's.
What is worth doing now
Work out how many days of credit VAT actually gives you today. Take your highest-turnover month of the past year and see how much would have left the account on the day each client paid, rather than on the 15th of the month after. If that number is alarming, it is a conversation to have with your bank quietly and early.
Anyone permanently in a refund position can run the reverse exercise and price what shorter waiting is worth. That figure is useful today too, when deciding when to buy equipment.
The signal to watch for is a draft bill on the timing of the VAT liability and on split payment. Until one is published, anyone selling you readiness for online VAT is selling air.