Tax Reliefs – Operation Swords of Iron

In recent days, the Israel Tax Authority has published a series of wartime tax reliefs. They include, inter alia, the following:

Donations

Non-profit organizations and public benefit companies holding valid permits pursuant to Section 46 of the Income Tax Ordinance may expand their activities and raise donations to help the war effort, even if their articles of association do not define such activity as their public purpose. For example, an NPO holding a permit pursuant to Section 46 and whose public purpose is education may expand its activities to raise donations for the purchase of equipment and food or for any other activity benefiting soldiers, families injured during the war, etc. That same NPO or public benefit company may also issue receipts to donors granting them the right to a tax credit for their donations pursuant to Section 46 of the Income Tax Ordinance. This is provided they fulfill particular criteria (the NPO/public benefit company passes a resolution in this regard, it designates the donations for use to assist during the war, etc.).

Imports of Donated Equipment to the IDF or Civilians

By law, imports of equipment to Israel are charged VAT and sometimes also customs duties upon release from the customs authorities. The Israel Tax Authority has published a procedure to ensure that imported donations of military or civilian equipment during the war are exempt from VAT. To release equipment intended for donation to the Israel Defense Forces, call the Ministry of Defense at 073-3538888 or send an email to [email protected]. To release civilian equipment (not intended for the IDF), call the Customs Administration hotline at 074-7409111 or send an email to [email protected].

Individual Foreign Residents Reporting for Military Reserve Duty

The Israel Tax Authority clarified that Regulation 3(3) of the Income Tax Regulations (Determination of Individuals to Be Deemed Residents of Israel and Determination of Individuals Not to Be Deemed Residents of Israel), 2006, which prescribes that individuals arriving in Israel to serve in the IDF will be deemed foreign residents until completion of their military service, also includes individuals arriving in Israel as a result of being called up for reserve duty under Emergency Order 8. This means that foreign residents who came to Israel to report for reserve duty under an Order 8 will continue to be deemed foreign residents until the conclusion of their reserve duty service. Furthermore, they will also be able to send notice to the Israel Tax Authority of their desire to be deemed foreign residents at a later date.

Various Extensions

The Israel Tax Authority has postponed the deadlines for filing periodic VAT, tax withholding, and income tax advance reports for September 2023. It will also grant extensions for filing tax returns and capital declarations for 2022. Extensions will also be granted for objections and appeals, document submissions, and tax assessment proceedings in all tax systems, as well as for the validity of withholding tax certificates that expired on September 30, 2023. In addition, the Israel Tax Authority will impose no new attachments in respect of debts and will not initiate execution and attachment proceedings until December 1, 2023.

***

Barnea Jaffa Lande’s Tax Department is at your service to advise and assist you in this regard.

Adv. Harel Perlmutter is a partner and heads the firm’s Tax Department. 

Adv. Alon Davidovich is an associate in the department.