Israel Launches Pilot Program to Compensate Businesses for Protection Racket Damages
Translated & summarized from Calcalist by baba
Israel's Tax Authority has initiated a pilot program offering up to 2 million shekels in compensation for businesses damaged by protection rackets. The program, active for two months in late 2026, requires a police report and proof of denied insurance coverage for malicious damage. It covers direct physical losses, excluding lost profits, and is funded by 30 million shekels from confiscated criminal assets. Claims must be filed within seven days of the damage, and payouts may be prorated if total claims exceed the budget.
The story in 6 lines · by baba
- Israel's Tax Authority launched a pilot program offering up to 2 million shekels for businesses harmed by protection rackets.
- The program runs for two months, from October 4 to December 4, 2026, with a 30 million shekel budget.
- Eligibility requires a police report confirming extortion and proof of denied insurance coverage for malicious damage.
- Compensation is limited to direct physical damage, excluding lost profits or business downtime.
- Claims must be filed within seven days of the damage, and payouts may be prorated.
- The initiative aims to encourage reporting of extortion by providing a state-funded compensation mechanism.
Israel's Tax Authority has launched a two-month pilot program offering compensation of up to 2 million shekels to businesses damaged by extortion, commonly known as "protection rackets." The program, running from October 4 to December 4, 2026, is funded by a 30 million shekel budget from confiscated criminal assets. This initiative aims to encourage business owners to report threats to the police, acknowledging the state's struggle to combat such crime. However, eligibility is contingent on strict conditions and bureaucratic procedures.
To qualify for compensation, businesses must have suffered direct damage to property, inventory, or equipment, or even their private residence, as a result of refusing to pay protection money or in retaliation for filing a police complaint. A prerequisite for any claim is an official police report confirming the damage is linked to an extortion incident. Attorneys Eli Doron and Shahar Nach explained that applicants must also hold a valid business license, have an active tax file, and demonstrate that their insurance company denied coverage for "malicious damage" despite the business owner fulfilling all required risk mitigation measures, such as installing security systems.
The pilot program specifically covers damages incurred from present-day refusals to pay, excluding those who previously succumbed to extortion. While tenants can claim compensation for damaged equipment or inventory they own, landlords are eligible for damage to the building itself, provided they meet the program's criteria. Crucially, businesses must have existing property insurance, and the claim to the state fund will only cover the portion of damage that the insurer explicitly excluded.
Applicants must submit their claims online to the Tax Authority within seven days of the damage occurring, and the damaged property must not be repaired before a state appraiser inspects it. Even if a police case is closed due to an unknown perpetrator, claims can still be processed if a police officer confirms the incident was extortion-related. Compensation is limited to direct physical damage, excluding lost profits or business downtime. If the total approved claims exceed the 30 million shekel budget, funds will be distributed proportionally among claimants. The payment process is expected to take several weeks after the pilot concludes in early December, with a maximum processing time of eight months.