Adds 5% to national tax collection from the first year
Intercepts between 1B and 2B NIS in VAT every month
Blocks ~16,000 suspicious invoices monthly from 100-150 businesses
Returns invoice decisions within 0.2 seconds at national scale
Maintains continuous availability with no downtime since launch
The Israel Tax Authority checks every business invoice in real time using Google Cloud, preventing fraud and raising tax collection by 5%.
The Israel Tax Authority checks every business invoice in real time using Google Cloud, preventing fraud and raising tax collection by 5%.
Preventing invoice fraud at the point of issuance
The Israel Tax Authority consolidates the country's tax divisions, including income tax, real estate taxation, value added tax (VAT), purchase tax, customs, and stamp duty. Its technical and operational arm, Shaam, is a unit of approximately 800 people responsible for the Authority's large-scale technology programs, frequently in cooperation with integrators in Israel and abroad.
Fictitious invoicing is the largest source of revenue loss in VAT systems worldwide. Businesses obtain invoices for transactions that never took place, reclaim the VAT, and dissolve the company before an audit can reach them. Because invoices have traditionally been reviewed only after issuance, tax authorities internationally recover between 1-2% of the revenue lost this way.
"Once there is an invoice out, the money has flown out," notes Arie Rimini, General Manager of Shaam at the Israel Tax Authority. "The criminal organizations behind this have all the mechanisms in place to take that invoice further, in a way the tax authority will not be able to stop."
Technology is no longer an enabler, it’s a disruptor. Tax authorities are generally conservative organizations, so we couldn’t go through strategic planning, then technical planning, then detailed planning, and then implement. We had to show them that it works.
Arie Rimini
General Manager of Shaam, Israel Tax Authority
In compliance with the Economic Efficiency Law of 2023, the Authority introduced Cheshbonit Israel, a real-time invoice clearance model. Every business-to-business invoice above 5,000 NIS, must receive an allocation number from the Authority before it is considered valid. Without that number, the receiving business cannot claim the VAT credit.
This required the Authority to evaluate every qualifying invoice in the country in real time, with continuous availability and the ability to respond quickly to new fraud methods. On-premises infrastructure could not absorb unpredictable peaks in demand or support that pace of change. The Authority built Cheshbonit Israel on Google Cloud, deployed under Israel's government cloud framework with additional security controls layered on top.
Validating invoices in real time with Google Kubernetes Engine and Cloud Run
When a business issues an invoice, its financial application calls the Authority's API a fraction of a second before the document is printed or sent. A rules engine and streaming machine learning models evaluate the transaction together, and within 0.2 seconds the Authority either issues an allocation number or withholds one.
About 1,000 invoices are declined each week, across roughly 150 businesses.
Because a real-time model inevitably produces false positives, Cheshbonit Israel includes a defined route back. A business can request an automatic re-examination and receive a decision within 48 hours, or present supporting documentation to the Authority in a review session.
We have to respond very quickly to new threats and new methods. On-prem, that’s a much slower process. Taking into account the capabilities of the tools on the cloud, we can do it in a much more timely manner, and test it much faster at large scale.
Arie Rimini
General Manager of Shaam, Israel Tax Authority
Most declined invoices are never contested through either route, and fewer than 0.5% are ultimately found to have been legitimate. The Tax Authority reads both as evidence that the system is declining the right transactions.
Google Kubernetes Engine and GKE Autopilot, host the microservices and API Connect runtime. Compute Engine supports core application hosting and SQL Server workloads, while Cloud Run handles event-driven jobs. Cloud SQL and Cloud Storage hold operational data and attachments. Cloud Load Balancing distributes traffic, Cloud Armor filters external-facing endpoints, and Cloud Logging and Cloud Monitoring carry metrics and alerting.
Because no qualifying invoice can be issued without an allocation number, availability is a national requirement, not an operational target.
Cloud infrastructure also lets the Authority absorb short peaks in volume and test new detection logic at full scale. In the first months of operation, fewer than 10 rules identified close to 100% of fictitious invoices, because the methods then in use were unsophisticated. As the financial incentive to bypass the system became clear, the attempts grew more sophisticated.
Shaam now introduces new detection methods weekly, and identity theft has become the primary route to a fraudulent allocation number.
Adding 5% to national tax collection, with income tax next
Shaam built Cheshbonit Israel in five months and brought it into full production five months later, following testing, security review, and regulatory approval.
The first year of operation established the scale of the problem. Fictitious invoicing accounted for 5-7% of total tax collection, with losses occurring twice: 18% VAT at the point of transaction, and a further 23% in income tax, as fraudulent invoices were reported as expenses against real profits. By preventing the majority of these invoices from being issued, the Authority added 5% to national tax collection in the system's first year, a level that has held consistent into the second. The system now intercepts approximately 1 billion NIS in VAT value each month, and the Authority closes around 150 companies for distributing fictitious invoices.
We look at Google as a partner, not as a supplier. We trust it with things we usually don’t trust vendors with. That allows us both to take a risk and to move quickly with capabilities that are very new.
Arie Rimini
General Manager of Shaam, Israel Tax Authority
"This system had a return on investment on the very first day," says Rimini. "Those are official numbers and they are accounted for. That is the advantage of working in a tax authority. You can demonstrate that a change produced results, and they are undisputed."
Rimini cites the working relationship with Google Cloud as a factor in the delivery timeline, pointing to the surrounding ecosystem of infrastructure, security, and application development support alongside the products themselves.
Following the success of the Cheshbonit Israel project, the Tax Authority is preparing full digitization of income tax for corporations and individuals. The system is being built on approximately 45 AI agents and Machine Learning models that continue to improve as they process more data.
In addition to the 5% Cheshbonit Israel is adding to the national tax collection, Shaam’s income tax project plans to add an additional 5% to income tax collection in its first year and approximately one percentage point in each subsequent year, reaching an increase of 15% within five years, with no change to tax rates.
The Israel Tax Authority (Shaam) consolidates the country's tax divisions, including income tax, real estate taxation, value added tax (VAT), purchase tax, customs, and stamp duty. Its technical and operational arm, Shaam, is a unit of approximately 800 people responsible for delivering the Authority's large-scale technology programs. Cheshbonit Israel, the Authority's real-time invoice clearance system, has been in full production since 2024.
Industry: Government
Location: Israel
Products: Google Kubernetes Engine, GKE Autopilot, Compute Engine, Cloud Run, Cloud Run functions, Cloud Load Balancing, Cloud Armor, Cloud SQL, Cloud Storage, Cloud Logging, Cloud Monitoring, Artifact Registry
