Israel to Use AI to Hunt Tax Evaders
The Israel Tax Authority is preparing to shift to checking all tax returns using artificial intelligence. Currently, only about 4% of reports are checked, but after the implementation of new systems, checks should cover all 100% of declarations. This will sharply reduce the chances of non-payers hiding their income. New systems will be able to analyze vast amounts of information and identify suspicious discrepancies. This is important for the state due to rising military spending. At the same time, the authority has renewed the voluntary disclosure procedure until August 31, 2026.
The Israel Tax Authority is preparing to shift to checking all tax returns using artificial intelligence, as reported on August 9 by Calcalist. While today the authority selectively checks only a small portion of reports, after the implementation of new systems, checks should cover all 100% of declarations. This will sharply reduce the chances of non-payers hiding their income. Until recently, tax control in Israel was largely based on selective checks. In 2024, it was reported that only about 1% of income tax reports were checked. Recently, the head of the Tax Authority stated that the authority now checks about 4% of declarations, but thanks to artificial intelligence, it expects to move to "checking 100% of all reports." The new systems will be able to analyze vast amounts of information in minutes, cross-reference data from different sources, and identify suspicious discrepancies. What used to take months of staff work can now be done almost in real time, note the authors of the Calcalist article, tax lawyers Eli Doron and Shahar Noach. This is especially important for the state due to rising military spending. Uncovering previously undeclared income could become an additional source of revenue for the treasury. For those who hide income, the situation, on the contrary, becomes significantly more difficult. It is increasingly hard to rely on the declaration simply not being checked or on discrepancies in the data going unnoticed. At the same time, the Tax Authority leaves the option to voluntarily settle violations. In August 2025, the authority renewed the voluntary disclosure procedure. It allows individuals to report undeclared income or assets, pay the required tax, and under certain conditions avoid criminal prosecution. This procedure will be in effect until August 31, 2026.