Annual report to Companies Registrar and Income Tax

Many company owners breathe a sigh of relief the moment their accountant informs them: "We're done, we filed the annual report." As far as they are concerned, they have fulfilled their duties to the authorities for the year. But this is a common mistake resulting from a misunderstanding of Israel's bureaucratic system, and it can cost the company dearly.

Israeli law stipulates that every Ltd. company must submit two different annual reports to two separate authorities. The first and familiar report is to the Income Tax Authority. The second report, which many tend to forget, is the annual report to the Registrar of Companies.

What Is the Difference Between the Reports and Why Isn't Tax Authority Filing Enough?

These two authorities require entirely different information and do not transfer data between themselves automatically:

  • The Income Tax Return (Financial Statements): Focuses solely on your financial numbers. It presents the balance sheet, profit and loss statement, expenses, revenues, and tax payments.
  • The Report to the Companies Registrar: Focuses on the company's legal and organizational structure. Its goal is to reflect the most up-to-date status: Who are the current shareholders? How are shares allocated? Who serves as a director? What is the official company address? And who is its auditing CPA?

In other words, even if you were perfectly organized with the Income Tax Authority, from the Companies Registrar's perspective โ€“ if you haven't submitted its dedicated report (and paid the annual fee), your company is considered as having failed to report altogether.

The Danger: Being Declared a "Law-Violating Company"

The Companies Law equips the Registrar of Companies with sharp enforcement teeth. A company that fails to submit its annual report to the Registrar (which usually must be filed within 14 days of financial statement approval) risks being declared a "Law-Violating Company".

The ramifications of such status are severe:

  1. Heavy Fines: Monetary fines amounting to thousands of Shekels levied on the company (and in certain cases, personal fines on the directors).
  2. Freeze on Corporate Actions: The company is registry-"paralyzed". You will not be able to change the company name, register liens or charges (preventing bank credit approval), alter share capital structure, or execute mergers.

Your Peace of Mind: We Cover All the Bases

Submitting the report to the Companies Registrar requires meticulous form completion and director signature verification by a lawyer or CPA.

To save you from running between authorities or missing critical deadlines, we at Bernstein CPA Firm take full responsibility for this. Immediately after completing the complex audit work on your financial statements and submitting them to Income Tax, we directly handle the editing, verification, and filing of your annual report to the Companies Registrar.

This way, you can be certain that your company complies with 100% of statutory requirements across all authorities simultaneously, remains free of penalties, and is free to focus on what truly matters โ€“ running and growing your business.