Israel's Registrar of Partnerships, Adv. Shuli Avni-Shaham, who also heads the Corporations Authority at the Ministry of Justice, has sent 22,370 warning letters to business partnerships operating without being registered with her office. The campaign became public on 12 October 2026. The letters give the partners 45 days to complete registration. Those who don't face sanctions, and the Registrar will tell the Tax Authority that the partnership was never registered. That notice lets the Tax Authority audit the business and check the tax paid by each partner.
The duty to register has been in the Partnerships Ordinance since 1975. For years almost nobody was asked to meet it. This is the first real enforcement.
Where the 22,000 came from
The trigger was a State Comptroller report on partnership taxation published this year. It found that 42,868 partnerships were active in Israel between 2017 and 2023, and 39,844 of them, 93%, had never registered. The unregistered ones turned over about ₪196 billion a year on average. The Comptroller criticised the Registrar for never contacting them or using its enforcement powers, and found that the fine for not registering has not changed since 1975. It is 15 lirot per partner per day, which is less than one agora today.
According to the Registrar, about 8,000 partnerships are registered with the Corporations Authority. It has also received data on roughly 26,000 partnerships that hold a VAT file with the Tax Authority but are missing from its register. In other words, the Tax Authority already knows most of them. The missing piece is the Ministry of Justice registration, and the two bodies are now matching their records.
Forty-five days, then a report to the tax office
The letters state that registering a partnership is a legal obligation, and that if it is not done the Registrar will consider using her powers under the law. The Corporations Authority says it will help partnerships register without difficulty.
The fine is still negligible, so the weight of the warning sits in the hand-off to the Tax Authority. A partnership that stays unregistered gets flagged as worth a look, and the look extends to the partners personally.
Registration reaches your invoices
Dr. Omer Nirhod, a corporate governance expert, points out that registration does not create the partnership. The law says failing to register does not cancel its existence, so an unregistered partnership is not automatically illegal or hidden from the tax authorities. He warns that registering can force changes to bank accounts, payment systems, invoicing and bookkeeping, and also to contracts, permits, insurance and employee arrangements. He considers 45 days a short window for a business that has been trading for years.
Uri Ezra, chair of Elliott Global Israel, flags a second problem in Israel Invoices, the Tax Authority's real-time invoice approval system. If the partnership looks to the system like a brand-new business that suddenly issues many invoices, it may block its allocation numbers. Without an allocation number, the customer cannot reclaim the VAT on the invoice.
Ezra also cautions against going the other way. Partners who use the moment to convert into a limited partnership may find the Tax Authority treats the transfer of the business as a sale. That can trigger tax, plus a report due within one month under section 104 of the Income Tax Ordinance.
Steps for a partner who got a letter
Register the partnership within 45 days of the letter's date. Before filing, go through with your accountant what registration changes: the business name on the bank account, the details printed on your invoices and held in your bookkeeping software, and contracts with customers and suppliers. If you are thinking of restructuring at the same time, for example into a limited partnership, check the tax consequences of that move first.
Keep an eye on allocation number requests in the weeks after registering. If they start getting refused, contact the Tax Authority before a large customer sends an invoice back. How allocation numbers work and when you need one is covered in our guide.