Israel Tax Authority Launches Pilot Compensation Program for Businesses Targeted by Extortion

Israel's Tax Authority announced on Sunday the launch of a pilot program to compensate business owners whose property has been damaged due to extortion, specifically in cases where they refused to pay protection money or reported such demands to the police. The program will run from October 4 to December 4, 2026, and is intended to cover direct damages to businesses, equipment, inventory, or the owner's residence. To be eligible, business owners must have a legal business, a valid operating license, and an active file with the Tax Authority. A crucial condition for receiving compensation is filing a police report recognized as related to protection money extortion. Furthermore, applicants must demonstrate that they did not receive insurance coverage for malicious damage or that their insurance claim was denied. They must also prove compliance with security and risk reduction measures required by their insurance company. For structural damage, proof that the building was constructed legally is necessary. The compensation scheme applies to damages incurred within Israel, including Area C. Claims must be submitted to the Tax Authority's compensation fund within seven days of the damage occurring, using a dedicated online system. It is imperative not to repair the damage before filing the claim and before an assessment by a property tax appraiser, as premature repairs could jeopardize the claim. However, minor repairs like replacing broken glass are permitted. The compensation covers only direct damages, excluding indirect losses or third-party damages. The maximum compensation per claim is NIS 2 million, with claims expected to be processed within eight months. This initiative stems from Government Resolution 4299, allocating NIS 30 million from the Tax Authority's budget and NIS 5 million from the National Security Ministry's budget for the pilot. Another government resolution, 4298, addresses enforcement measures against extortion and protection money rackets.