The Amutot (Non-Profit Organizations) Law

Bill to Amend the Income Tax Ordinance (Support of Israeli NGOs by Foreign Political Entities) – 2013

 

Tabled by: MK Ayelet Shaked (Habayit Hayehudi)

Status: Received approval from the Ministerial Committee for Legislative Affairs (15/12/13). It will now appear before the full Knesset plenum for a preliminary vote.

 

 

1. In the Income Tax Ordinance (hereonin: the ordinance), the following subsection will be added after paragraph 3:

“(1A) – A donation from a foreign state entity will be subjected to a tax rate of 45%, if the goals or conduct of the non-profit organization, or conduct of any member of the board of the non-profit organization, expressly or implicitly supports one of the following positions:

(a) Calling for the prosecution of IDF soldiers in an international court;

(b) Calling for boycotts, divestment or sanctions against the State of Israel or its citizens;

(c) Denying the existence of Israel as a Jewish and democratic state;

(d) Incitement to racism;

(e) Supporting the armed struggle of an enemy state or a terrorist organization against the State of Israel.”

In this section, “foreign state entity” – will be defined as per section 36A of the Amutot (Non-Profit Organizations) Law 1980.

2. In Section 9(2) of the Ordinance, in subsection (a), at the point where it is written “a member who is in control of a those engaged in the business” the following will be added: “except income that is a donation from a foreign political entity pursuant to section 3(1A).”

 

Explanatory Memorandum

This bill seeks to limit the involvement of foreign state entities in Israel’s democracy, which comes about through financial support of non-profit organizations, whose goals – or their actual activities – go well beyond the realm of the democratic discourse in Israel and amount to an attempt to seriously damage and significantly interfere in the basic characteristics of the State of Israel and its sovereignty.

The bill proposes that a non-profit organization that receives a donation from a foreign state entity, and if the goals or conduct of the non-profit organization, or member of the board of the organization expressly or implicitly support one of the five positions outlined above in the bill, will be subject to a tax rate of 45% on the donation.

In order to prevent an organization from de facto operating in one of the areas prohibited by the law through independent activities of one its board members, this bill proposes that the law be applied also in cases where members of the organization’s board are active in the areas listed in the paragraph.

 

Update: 

Following a vote by the the Ministerial Committee for Legislative Affairs on December 15, 2013 , two changes were made to the draft bill:

• In section (1A) the words “or conduct of any member of the board of the non-profit organization” were removed;
• Section (1A)(c) was deleted: “Denying the existence of Israel as a Jewish and democratic state;”

 

Related Materials

For additional information on the bill.

ACRI’s Position Paper on this bill.

The original Hebrew version of this bill.

 

Note: this is an unofficial translation of the bill.