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Tax Authority surprise raid in Eilat: Half of businesses found no income
Israel Tax Authority's Eilat raid reveals 13 of 30 businesses registered no income, exposing significant tax evasion and cash law violations in commerce.
The National Bookkeeping Management Unit of the Tax Authority held an extensive inspection operation this week in the city of Eilat as part of its ongoing enforcement and deterrence policy against tax evasion. During the operation, dozens of inspections were carried out in businesses from the commerce, services, tourism, catering, and transportation sectors. The inspections focused on examining the level of compliance with bookkeeping regulations, lawful income registration, and enforcement of the law to reduce cash usage. The findings indicate that a significant portion of the businesses inspected had substantial deficiencies. Out of 30 businesses inspected, 13 did not register income, and an additional 4 cases of violation of the law to reduce cash usage were recorded.
In one case, inspectors observed a garage in the evening and saw a vehicle on the ramp. The inspectors recorded the vehicle’s license plate number and thus obtained the owner’s mobile phone number. Later, during the inspection, it was found that the garage owner had not registered income for the service performed on that vehicle. After the garage owner claimed in response that he had not received payment for the service on that vehicle, the inspectors called the vehicle owner, who told them she had paid ₪1,900 in cash to the garage owner. As a result, it was determined that the garage owner had committed a violation of failure to register income and also a violation of the cash law, for which he is subject to financial sanctions.
In another case, an inspection was conducted at a business selling deals for tourism and leisure, and the safe where the business’s income was stored was examined. A check for ₪9,000 payable immediately was found in the safe, which had not been registered in the business’s books. This constitutes a violation of failure to register income and a violation of the law to reduce cash usage.
At a car wash business, observations and an inspection were conducted, and it was found that the owner had not registered income and had not kept books as required. The owner responded by saying, “I remember them all in my head.”
As part of the operation, inspections were conducted at several restaurants and pubs. Before the inspections, the inspectors posed as customers and made purchases at the businesses. In two pubs, it was found that the tip paid during the purchase was not registered in the business’s books. In one of the pubs, it was also found that income from a payment app was not registered. In one restaurant, it was found that income from a payment app was not registered. The restaurant owners responded by saying, “We are a new business and trying to understand what the business requires. We had power outages so we took a break and forgot to issue receipts.”
The National Bookkeeping Management Unit will continue to operate anywhere and at any time to enforce the provisions of the law on an ongoing basis and through operations as part of the Tax Authority’s extensive activities against the black market and tax evaders. This is within the framework of the policy to increase enforcement activities to improve and maintain deterrence, with the aim of achieving true reporting and true tax collection, thereby increasing the burden sharing among citizens.
