A new Knesset bill intends to heavily tax donations from foreign governments to civil society organizations. According to the bill, introduced on 13 February 2023 by Member of Knesset (MK) Ariel Kallner of the governing Likud party, a ‘donation that interferes with the internal affairs of the State of Israel’, whether directly or indirectly, will be taxed at a rate of 65%. Moreover, non-profit organizations that receive such donations will not be exempt from Value Added Tax (VAT), and their private donors will not be entitled to tax credits.
The draft law provides an extremely broad definition of what is a ‘donation that interferes with the internal affairs of the State of Israel’: a donation that promotes a public purpose through an appeal or support for an appeal to one of the following: the court; Knesset members; government ministries, authorities, and their employees; local authorities and their employees; and ‘public opinion among Israeli citizens through paid advertising’.
The bill’s explanatory notes state that ‘the bill seeks to reduce through taxation the involvement of foreign governmental entities in Israeli democracy’. The explanatory notes further state that such an involvement, including interference in legal issues in Israel, in political activity, in governmental policy, in municipal policy, or in public opinion, ‘constitutes a blow to the fundamental characteristics of the independent State of Israel as well as a blow to the sovereignty of its citizens’.
The director of policy advocacy for the Association for Civil Rights in Israel (ACRI), Attorney Debbie Gild-Hayo, said this is a ‘step up in the attempts to silence and delegitimize civil society organizations, whose only crime is criticizing government policy in Israel and in the territories, and promoting liberal agendas of human rights and democracy.Attorney Gild-Hayo explained that the draft law is only one element of anti-democratic legislation aiming at shrinking of democratic space in Israel and de-legitimizing human rights organizations.
Similarly, Michael Sfard, the legal adviser to Yesh Din, an Israeli human rights organization, described the bill as a ‘clear attempt to silence us. Such taxation might be a fatal blow to many organizations. A similar bill introduced in 2012 was finally prevented due to European and American pressure.’Mr. Sfard said that the bill ‘will not harm right-wing organizations because most of the donations they receive from overseas come from private individuals and bodies whose interests, in general, are not promoting democracy and human rights.’
MK Ariel Kallner, who submitted the bill, recently declared that the Israeli organization Breaking the Silence is an antisemitic organization.MK Kallner stated that Breaking the Silence is a ‘marginal organization of the most despicable people, auto-antisemites who hate their own people.’Referring to the International Holocaust Remembrance Alliance (IHRA) Working Definition of Antisemitism, MK Kallner explained that ‘delegitimization of the state of Israel is one of the expressions of modern antisemitism. Antisemitism has various forms. One of them is to try and prove that the state of Israel is an apartheid state, a state which commits war crimes’.
This use of the fight against antisemitism to silence Israeli human rights organizations occurred on the occasion of the launch of the Knesset ‘lobby forfighting antisemitism and delegitimization of the state of Israel’ on 13 March 2023.MK Kallner said that the creation of the lobby group was ‘inspired’ and ‘initiated’ by Mr. Matan Peleg, the CEO of the influential Israeli organization Im Tirtzu, which targets Israeli Human Rights groups, depicting them as foreign agents.
Israel’s Minister of Diaspora Affairs and Combating Antisemitism, Amichai Chikli, said during the event that ‘soft antisemitism is presenting Israel as an oppressive, occupying, violent entity’.Israel’s Foreign Minister, Eli Cohen, declared during the launch of this lobby group that he wishes to work together with MK Kallner to promote legislation that ‘will forbid the European Union and its’ Member States from intervening in the Israeli-Palestinian conflict and in Israel’s internal political affairs.’. Minister Cohen also said that he had made it clear to the EU ambassador in Israel that ‘Israel will oppose the intervention of the EU, or its Member States, in the Israeli-Palestinian conflict’.Foreign Minister Cohen added that Breaking the Silence is an ‘ugly phenomenon’ which acts against the state of Israel and declared: ‘acting against the state of Israel in the world is a despicable act that has no place. And I say to these people: ‘Everything is documented’’.
This draft law, aiming at silencing civil society organizations, was not introduced by the government of the state of Israel or by a Knesset committee. Rather, it is a private bill that was prepared and submitted to the Knesset presidium by MK Ariel Kallner himself, as an individual parliamentarian, and it now awaits a preliminary reading in the plenum.
In fact, MK Ariel Kallner is the new head of the Knesset Delegation for Relations with the European Parliament (EP). In his first attendance at a meeting of the EP’s Delegation for Relations with Israel (D-IL), on 19 April 2023, discussing Israel’s 75th independence day and recent developments, MEP Ilana Cicurel (Renew, France) expressed her concern regarding the democratic character of Israel.MK Kallner replied to her very briefly, saying that he is ‘optimistic’ and that ‘Israel will remain a democracy’, but did not elaborate further on the topic.
In contrast to his concise comment on the issue, Helene Le Gal, Managing Director for the Middle East and North Africa (MENA), European External Action Service (EEAS), declared in her intervention during that meeting that the EU and Israel share multitude values such as rule of law, democracy, freedom of expression, etc., and recalled that respect for human rights and democratic principles is an essential element of EU-Israel relations.
Recommendation to the European parliament
The European Parliament should request MK Ariel Kallner, head of the Knesset Delegation for Relations with the European Parliament, to withdraw his private bill to tax donations from foreign governments to civil society organizations.
Recommendation to the European External Action Service (EEAS)
The EU’s High Representative, Josep Borrell, should clarify to Israel’s Foreign Minister, Eli Cohen, that the EU strongly opposes Knesset legislation which aims at silencing and delegitimizing civil society organizations.
Recommendation to EU Member States
Ministries of Foreign Affairs of EU Member States should clarify to Israel’s Ministry of Foreign Affairs that they strongly oppose any Knesset legislation which aims atsilencing and delegitimizing civil society organizations.
Bill proposal to amend the income tax ordinance (taxation of donations from a foreign entity) 2023 (in Hebrew). https://main.knesset.gov.il/Activity/Legislation/Laws/Pages/LawBill.aspx?t=lawsuggestionssearch&lawitemid=2199819
The new government’s commitment to pass legislation to tax donations from foreign governments to Israeli organizations was already stated in the coalition agreement between the Likud party and the Jewish Power Party of 28 December 2022, article 136, p. 11 (in Hebrew). Previous similar bills were submitted to the Knesset in 2022 by former MK and current Minister of Culture and Sports, Makhluf Miki Zohar (Likud), and MK Kathrin Shitrit (Likud).
Interview with Attorney Debbie Gild-Hayo, 25 April 2023, by phone.
Interview with Attorney Michael Sfard, 19 April 2023, by phone.
Cited in Maanit, Chen, ‘Israel’s New Government Set to Tax Foreign Government Donations to Civil Society Groups’, Haaretz, 29 December 2022.
Interview with Yael Zin, 14 March 2023, Radio Galey Israel(in Hebrew). See: https://gly.co.il/item?id=22243&fbclid=IwAR2XGs07sze5_eJkN7XGcnM40zhye0_qJDA6mkLKx1EdNSyWipzCIHCq1HY
Besides Breaking the Silence, several speakers at the event also criticized other Israeli civil society organizations, such as Peace Now and HaMoked – Center for the Defence of the Individual.
Matan Peleg, Alon Schvartzer and the Im Tirtzu movement, ‘Foreign Agents Report’, 2015. See also the book by Matan Peleg, A State for Sale: How Foreign Countries Interfere with Israel Policy, Jerusalem: Sella-Meir Publishers, 2022.
See video broadcast of the event on the Israeli Knesset’s website (in Hebrew): https://www.knesset.tv/committees/conventions/video/51313/
See Knesset’s Rule of Procedure, updated 12 March 2023, under section two – private legislative bills, of chapter 7 – legislative procedure, p. 83 (In Hebrew).
D-IL ordinary meeting of 19 April 2023.
See the ‘essential element’ clause of the EU-Israel Association Agreement of 1995 (Article 2).