Israel Launches New Compensation Track for Protection Racket Victims

Israel's Tax Authority has opened a new compensation channel for business owners who suffer direct property damage due to extortion, commonly known as protection rackets. This pilot program, operating under government decision 4299, covers damages incurred between October 4, 2026, and December 4, 2026. Eligible business owners must operate legally, possess a valid business license, and have an active file with the Tax Authority. Compensation is available for damage to business assets like buildings, inventory, or equipment, as well as to their homes, if the damage resulted from refusing to pay protection money or from filing a police complaint.

To qualify, applicants must have filed a police complaint recognized as related to protection racket extortion. They also need to demonstrate that they could not obtain insurance coverage for malicious damage, even if previously insured for it, or that their insurance claim was denied. Additional conditions include adhering to security and risk reduction measures required by insurers. For structural damage, proof of lawful construction is necessary.

Claims must be submitted to the Tax Authority's compensation fund within seven days of the damage occurring, using an online system. Crucially, victims are instructed not to repair the damage before a property tax appraiser inspects it, as repairs could jeopardize the claim. However, broken glass and debris can be cleared. The maximum compensation under this track is NIS 2 million, covering only direct damages, not indirect losses or third-party harm. The processing time for claims is set at up to eight months.