Israel Tax Authority Seeks Millions Back From Businesses Aided After War

Israel's Tax Authority is demanding the return of approximately 238.4 million shekels (about $64 million) from 3,751 businesses that received compensation or advances following damages sustained during the "Iron Swords" war. Of this amount, about 184.3 million shekels are being sought from 2,991 businesses located in the northern "line of confrontation" communities, which were evacuated for about a year and a half. These figures represent a fraction of the 5.8 billion shekels in compensation disbursed by the authority to war-affected businesses in the north, with nearly 4 billion shekels going to businesses in the evacuated frontline communities.

Business owners in the north express frustration and financial distress, with some reporting that their businesses closed due to the prolonged conflict and subsequent recovery challenges. One tourism business owner, who was evacuated for 1.5 years, stated he applied for 70,000 shekels in compensation but received only 56,000 shekels in advances. Now, after his final claim was largely rejected, he is being asked to repay the advances, an amount he cannot afford.

Despite the war's official end, many northern businesses feel stuck, facing ongoing security incidents and struggling with delayed or insufficient compensation. The Tax Authority had established three main compensation tracks for indirect damages: the "Red Track" for evacuated frontline businesses offering full compensation for lost profits, the "Green Track" for special areas with compensation caps, and a track for eligible expenses or business continuity grants. Additional tracks were created for agriculture, evacuee wages, and reservists.

While the Tax Authority reports that over 100,000 claims have been processed out of 121,302 submitted, many business representatives and owners claim significant delays and difficulties in receiving full compensation. Some report waiting years for final payouts, while others feel pressured to accept lower settlement amounts. Accountants and tax experts cite a lack of sufficient personnel within the Tax Authority to handle the volume of claims, leading to prolonged processing times and a backlog of cases, with no deadlines for claim resolution.

The Tax Authority responded by stating that its employees are diligently handling an unprecedented volume of claims and that without specific details of the businesses mentioned, they could not investigate the claims.