NGOs and PBCs to Report Donations via Israel Tax Authority’s Digital Reporting System
Summary
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Starting January 1, 2026, NGOs under Section 46 must report donations via the ITA’s digital system.
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Reporting will occur through integrated receipt software with a super-authorized representative.
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The change aims to enhance transparency, prevent fraud, and ensure proper fund use.
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Compliance is required to maintain Section 46 approval; noncompliance may affect status.
Starting on January 1, 2026, a significant change will take effect in the reporting format of donations received by NGOs, including amutot and public benefit companies (PBCs).
In July 2025, the Israel Tax Authority (ITA) published an addendum to Income Tax Circular 9/2015 (Guidelines for Applying Section 46 of the Income Tax Ordinance).
Until now, NGOs had to report donations as part of their annual reports to the Registrar of Amutot and to the ITA.
Main Changes
- As of January 1, 2026, all NGOs approved as public institutions pursuant to Section 46 of the Income Tax Ordinance must report donations and cancellations of donations through the ITA’s digital donation system.
- NGOs will automatically report through software for generating receipts for donations, provided the software has been integrated with the ITA’s digital donation system and the NGO has appointed a super-authorized representative for the ITA’s digital services.
- Each donation receipt must include all required information, including the donor’s ID number for reporting purposes.
Purposes of the Change
- Transparency and oversight – to ensure the donated funds are being used for approved public purposes.
- Fraud prevention – to guarantee reliable reporting and to prevent entities from issuing fictitious receipts.
- Abuse prevention – to prevent duplicate or fictitious receipts and to safeguard financial propriety.
Importance of Complying with the New Reporting Format
- Compliance with the new reporting requirements will be a precondition for examining a public institution’s application for approval pursuant to Section 46.
- Failure to comply may result in a re-examination of a public institution’s status under Section 46.
We recommend NGOs recognized as public institutions begin to prepare for reporting via the ITA’s digital donation system, by verifying their internal processes and systems are ready and by appointing the required super-authorized representative. This will help ensure proper reporting and prevent any risk to the public institution’s status.
The information in this update does not constitute legal advice. We recommend NGOs consult with professionals to obtain personalized advice.
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Adv. Sagi Gross, a partner in the Corporate Department and head of Barnea Jaffa Lande’s NGO practice, is available to provide guidance and answer any relevant questions. Our firm specializes in representing amutot (nonprofit organizations), including third-sector organizations, public benefit companies, endowments, etc.