Israeli Tax Authority Targets Yeshivas While Alleged Terror-Supporting NGOs Retain Tax Exemptions

In recent weeks, the Israeli Tax Authority has initiated procedures to revoke tax exemptions under Section 46 from dozens of yeshivas and religious institutions whose students are obligated to serve in the military but have not regularized their status with the army. This move follows the Attorney General's position that the state should cease granting tax benefits to donors of institutions where students avoid military service, viewing it as indirect funding of such institutions.

However, an investigation by Kikar HaShabbat reveals that while the Tax Authority is cracking down on Torah institutions, it has not taken similar action against NGOs suspected of supporting terror organizations. Notably, organizations like Physicians for Human Rights and the Association for Civil Rights in Israel continue to enjoy Section 46 tax exemptions despite expressing solidarity with the Palestinian group Al-Haq, designated a terrorist organization by Israel’s Defense Minister in 2021 due to its links with the Popular Front for the Liberation of Palestine. The U.S. government has also imposed sanctions on Al-Haq and other Palestinian groups, which these NGOs have publicly condemned and opposed.

Physicians for Human Rights published a report in July 2023 accusing Israel of committing genocide in Gaza, aiming to influence international opinion during the conflict. The Association for Civil Rights in Israel has been involved in multiple legal petitions challenging Israeli policies during the war, including calls to prosecute Israeli military officials. Both organizations provide legal representation to security detainees, including terrorists.

Another NGO holding Section 46 status is Jaffa Theater, which has staged works by Einat Weitzman that the Treasury’s legal advisor found to contain messages supporting terror. Recently, the theater presented a play alleging deliberate starvation policies by Israel in Gaza. Despite these controversies, Jaffa Theater is expected to receive over half a million shekels in government cultural funding in 2026.

Following these revelations, the NGO B’Tselem petitioned the Tax Authority and Finance Minister Bezalel Smotrich to review these organizations’ tax exemption eligibility. Finance Committee Chair MK Hanoch Milwitsky expressed hope that the Attorney General would also scrutinize left-wing organizations supporting terror, as is done with Torah institutions, though he doubts this will happen soon. The Tax Authority declined to comment on ongoing investigations due to confidentiality laws. Physicians for Human Rights stated they comply with legal reporting requirements, while the Association for Civil Rights and Jaffa Theater did not respond by publication time.