Taxation on Charity

The Problem

In an explicit and intentional violation of the international trade agreements Israel has with the US, UK, and Canada, foreign donors cannot donate items to Israel's homeless, destitute and needy without the risk of their goods being confiscated or incurring a hefty tax fee running into tens of thousands of shekels. Over the past decade, the Israeli tax authorities have collected tens of millions of dollars without anyone willing to challenge them.  

A few of the numerous and tragic cases we have come across:

1. Clothes donated by communities in Beverly Hills for those affected by terrorist rocket attacks were confiscated and never reached the intended recipients. 

2. A donor contributed a large quantity of dolls directly to a number of Israeli children's hospitals. The dolls were flown over by El Al free of charge only to be confiscated by the Israeli tax authorities.

3. A Mexican donor sent over a shipload of small tables and chairs for schools in the south of Israel.  They arrived at the Port of Ashdod, and also disappeared.  Fortunately they were later found, but amazingly enough, they ended up at the American School in Gaza.

Cases like these and significant misinformation by official institutions have led to the popular misconception that all charitable donations are taxed in Israel. In fact, there is no law that requires the taxation of charitable donations but on the flip side, there is also no law preventing the taxation which means that the tax authorities can extort money from innocent donors without being penalized. This is a truly outrageous violation of every tenet of Judaism and Western values. 

"There has never been such a law passed in any Knesset, and there never will be such a law passed in any Knesset."                                 - Prime Minister Benjamin Netanyahu speaking about the taxation on charitable donations 4 July, 2014.

Our Approach

For over ten years, RHIF has been the only organization in the world fighting against the unlawful taxation on charitable donations from abroad. We are not shy about confronting the lawmakers and politicians of this country in the name of charity and helping those who cannot help themselves, which has led to fierce resistance from the authorities. In fact, after RHIF's Director published a critical article on the issue in the Los Angeles Times, the Ministry of Finance placed a passport hold on the Director's Israeli and American passports in an act of intimidation for whistle-blowing impropriety on the part of the Customs and Tax Authority.

Nevertheless, RHIF continues to lobby Knesset members to execute a new law explicitly prohibiting the taxation. We also lobby ambassadors from all countries with a free trade agreement to urge the Israeli government to add charitable gifts as an item on tax-free goods list. 

Our Impact

Through a number of meetings with the Ministry of Finance staff RHIF successfully obtained a practical solution for any charity that needs it in the form of a procedural agreement that no tax should be levied on charitable donations. We are now working on a long-term solution by lobbying Knesset members to create and execute the law prohibiting the taxation of charitable donations.