Israeli NGO tax bill likely shelved after attack by ambassadors, embassies

The government has likely decided to shelve a bill proposal to tax donations from foreign entities, including EU and UN bodies, at a rate of 65%, after several ambassadors and embassies located in Israel criticized it on Thursday, when it appeared on the government’s agenda for this week, a diplomatic source confirmed on Saturday night.

According to the proposal, donations to NGOs whose actions in the two years before or after the donation were intended to influence government policy by addressing the branches of government or public opinion would be considered “a donation that interferes in Israel’s domestic policy.”

Such donations would be taxed 65% without the right of “exemption, deduction, offsetting or reduction in any way.”

In addition, NGOs that received such donations in the past two years would lose their status as a public institution.

The bill was initially set to be brought before the Ministerial Committee for Legislation on Sunday, but it was likely removed from the agenda after criticism from a number of ambassadors and embassies.

Hans Docter, the Dutch ambassador to Israel, and Steffen Seibert, the German ambassador, said the draft bill was “of grave concern to us and many of Israel’s international partners. Lively and unhindered relations between civil societies are an essential value in our liberal democracies.”

The ambassadors additionally said that they will “continue to raise the issue with our Israeli friends.”

Erik Ullenhag, Sweden’s ambassador in Israel, stated that “a vital and strong civil society is crucial for every democracy,” and he claimed such taxation “would severely limit Israeli civil society.”

Embassies express concern over Israel's diplomatic relations

The Norwegian, Danish, Irish and Belgian embassies in Israel also expressed concern for Israel’s relations with its international partners.

The Association for Civil Rights in Israel stated on Thursday that the bill would lead to NGOs that engage in what would be considered “illegitimate activities” having their non-profit status taken away. The association also claimed that passing the bill could lead to the “literal collapse of dozens and perhaps hundreds of NGOs, and will seriously harm the human rights of Israelis and Palestinians.”

According to the bill’s explanatory section, its intention is to “reduce via taxes the interference of foreign countries in Israeli democracy.” The bill, which was proposed by Likud MK Ariel Kallner, has been proposed a number of times in the past with nearly identical wording. While it would apply to NGOs from all political camps, the bill is broadly viewed as an attempt to restrict the influence of NGOs that are considered left-wing, many of which depend on foreign donations.