Brothers' Tax Case Highlights Decades-Long Legal Battles and Delays

The tax cases of brothers Samir and Shukri Farawji, former owners of the Knights Palace Hotel in Jerusalem's Old City, illustrate extreme civil and criminal legal delays. The hotel, located near the New Gate in the Christian Quarter and owned by the Latin Patriarchate, was the subject of a tax dispute that spanned over two decades.

In 2014, the Israel Tax Authority launched a criminal investigation into the brothers, initially suspecting them of concealing NIS 50 million. However, by the time an indictment was filed in 2020, the alleged amount had decreased to NIS 35 million for the years 2001-2014. Ultimately, a plea deal resulted in the hotel tax charges being dropped. The brothers pleaded guilty to concealing NIS 580,000 in rental income from a building owned by Shukri. Shukri received a seven-month community service sentence, and Samir received 300 hours of public service.

Concurrently, in 2014, Jerusalem's tax assessor issued a discretionary assessment for the years 1996-2010. Due to statutes of limitation, this was later revised to cover only 2002-2010. The Tax Authority claimed millions in taxes, while the brothers argued they owed nothing. The brothers and their company appealed the assessments to the Jerusalem District Court in 2017.

Over five years, eight hearings were held, including preliminary discussions from October 2019 to November 2023 and evidentiary hearings in February, March, and April 2024. The court proceedings were held in private, making it difficult to ascertain the reasons for the extensive delays, particularly the four-year gap in preliminary hearings.

In early May 2026, Judge Avigdor Dorot dismissed the brothers' appeals, stating he did not trust the testimony of the hotel's accountant, Philip Farg. The judge noted that his final ruling was based on all evidence and arguments, not solely on preliminary insights he had shared with the parties in March 2024. The ruling concluded a 24-year period from the initial income events to the civil judgment, and 12 years from the start of the civil proceedings. The judge suggested that a further appeal to the Supreme Court could add another two to three years to the process, potentially making it a candidate for the longest-running tax case.