Event Summary
The Knesset’s Constitution, Law and Justice Committee is advancing a bill that would impose a tax on many Israeli CSOs that receive donations from foreign governmental entities. According to the bill (Proposal No. 5222/2, 2024), currently being prepared for a first reading, any NGO that reports having received such funding (above a threshold yet to be determined) will be required to attach a declaration stating that it will refrain from actions (prohibited to senior civil servants) such as: criticizing the government or its ministries, lobbying the Knesset for the following three years.
This would prohibit most advocacy actions undertaken by CSOs in relation to government and parliament. If an organization refuses to sign the declaration it will be subject to a 23% tax, the same as Israel’s corporate tax rate. If it signs but then violates the commitment it will face a 46% tax in addition to financial penalties and legal measures.
The current bill is an updated version of a previous proposal which sought to impose an 80% tax on certain NGOs receiving support from foreign state entities. The revised version, submitted by Committee Chair MK Simcha Rothman, would affect a far broader group of NGOs than the original draft. Both supporters and opponents believe that if passed, the bill will effectively halt donations from foreign governmental sources making the lowered tax rates irrelevant in practice.
Due to the Knesset’s summer recess and a coalition political crisis, it remains unclear whether the committee will move forward with the bill. However, the committee discussion held on 21 July 2025, demonstrated a clear intent by key coalition members to significantly restrict foreign governmental funding to Israeli CSOs, a position stated explicitly by Finance Minister, MK Bezalel Smotrich.