Israeli Tax Authority Imposes New Conditions on Ultra-Orthodox Yeshivas for Tax-Exempt Donations

The Israeli Tax Authority has recently introduced new requirements for dozens of ultra-Orthodox yeshivas and religious institutions seeking to obtain or renew recognition under Section 46 of the Income Tax Ordinance. This recognition allows donors to receive tax credits for their contributions. The institutions must now provide detailed information about their students and certify compliance with military service regulations.

Specifically, yeshivas are required to declare that none of their students have been called for military service without legally regularizing their status, and that no students are classified as draft evaders. They must also commit to not accepting future students who fail to resolve their military status. The institutions must submit full lists of students, including names and ID numbers, along with official documents such as exemption certificates, discharge papers, or enlistment confirmations.

Failure to meet these new conditions could result in the revocation of Section 46 recognition, significantly impacting the yeshivas' ability to raise funds through tax-deductible donations. This move follows a directive from the Attorney General, Gali Baharav-Miara, issued at the end of May, instructing the Tax Authority to prevent tax benefits for institutions with students who have not regularized their military status. A special team has also been established to monitor and block indirect funding channels to such institutions.

The policy shift has drawn sharp criticism from political and religious figures. Aryeh Deri, leader of the Shas party, condemned the measures as potentially sparking a "tax rebellion" and deepening the rift between the ultra-Orthodox community and the state. He urged Prime Minister Netanyahu and coalition leaders to oppose the move, warning it threatens the unity of the right-wing bloc and the community's trust in government.

Within the ultra-Orthodox world, the new requirements are seen as a significant policy change that could disrupt the daily operations of yeshivas and reduce their fundraising capabilities. The Tax Authority's enforcement of these conditions marks a notable escalation in efforts to link tax benefits to compliance with military service obligations among ultra-Orthodox students.