Intense days of war pose significant challenges to the Israeli economy and threaten its economic resilience. This reality obliges the Ministry of Finance and the tax authorities in Israel to prepare accordingly and provide a response to the needs of taxpayers and businesses having to deal with operational disruptions and damage to their ongoing operations. In light of this, a series of regulatory reliefs were recently published, including postponement of the deadlines for reporting and the payment of tax, and a relaxation in collection and enforcement proceedings, as well as designated compensation arrangements for war-related damages. In this newsflash we will discuss the gist of the recent publications, emphasize important issues and offer-up points for thought.
The Israel Tax Authority (ITA) announced that the deadline for submission of the periodic report and payment with regard to VAT, deductions and income tax advances, in respect of February 2026, for those reported in a monthly report and in respect of January-February 2026, for those reported in a bi-monthly report, will be postponed to 26 March 2026.
In addition, the deadline for submitting the annual declaration for 2025 by an exempt dealer will be postponed until 30 April 2026, and the deadline for submitting the annual summary report by a small business owner for 2025, which has already been postponed to 31 May 2026, will continue to apply today.
It should be noted that the last quota measurement dates that constitute part of an extension arrangement for the submission of annual income tax reports for the 2024 tax year—which were postponed to 30 March 2026 for representatives and 29 April 2026 for corporate reports, will continue to apply, without change. In other words, no further extension was received regarding those reports and they will need to be submitted by the aforementioned dates.
Against the backdrop of the request made by the professional bureaus, in light of the security situation in the country as a consequence of Operation “Roaring Lion”, and in order to make it easier for the public, the Director of the ITA, Shay Aharonovich, has ordered that in all tax systems—income tax, deductions, real estate tax, VAT and customs—no new debt foreclosures will be imposed, nor will any execution proceedings be carried out until 12 April 2026, save in exceptional cases, and solely with the approval of the Senior Deputy Director General for Collection Enforcement. This deadline will be updated at a later stage in conformity with the security situation.
It should be emphasized that this does not entail the cancellation of existing foreclosures nor an erasure of debts, but merely a freeze of the aforesaid proceedings during wartime. In any event, it is important to note that fines, linkage differentials and interest will continue to apply according to law, even during the freezing period.
The Property Tax and Compensation Fund Law, 5721-1961 (the Property Tax Law) and regulations enacted thereunder provide insurance coverage for a building and/or property located in Israel and which sustained damage during the war. As a consequence of Operation “Roaring Lion”, on 1 March 2026 the ITA initiated the possibility of filing claims for direct damage under the “fast track”. As part of the “fast track”, it is possible to receive confirmation of a claim without having to wait for an appraiser, within 7 days from the date of completion of the claim and all required details. The fast track will be closed upon conclusion of the Operation. Below is a breakdown of the conditions for claiming damages under the various tracks:
As part of the regular handling procedure, representatives of the Compensation Fund (Property Tax) at the ITA attend at the damaged property accompanied by professional appraisers and engineers, conduct a tour of the damaged property and instruct victims about their rights and of the procedure for filing a claim for compensation.
Several binding guidelines apply in relation to this procedure:
– No equipment, inventory, waste or any other item located in the damaged property should be moved without prior coordination with an appraiser on behalf of the Compensation Fund.
– No repairs should be made to the damaged property prior to an inspection being conducted by an appraiser on behalf of the Fund.
Filing a claim under the fast track will be possible if the following conditions are met:
– The claim is filed for direct damage caused to the building and/or its content in an amount not exceeding NIS 30,000.
– The claimant satisfies the definition of “damaged” under the Property Tax Law. In other words, it concerns the owner of the property or anyone proving that he will be bearing the expenses for restoring the property himself, or the owner of the content that is damaged—including a tenant of the property.
– The submission of declarations and documents, including photographs and price quotes for attending to the repairs.
– Uploading photographs from the scene of the affected property evidencing the damage that was sustained.
– Filing an invoice for expenses that were incurred for attending to the repairs within 30 days from the date of payment of the compensation, at the latest.
– Filing only one claim per family unit and only one claim for the event of damage.
– Waiver on the part of the victim of the possibility of filing additional claims for the event of damage, including a claim under the regular track.
It should be noted that the ITA is insistent that photographs from the scene of the damaged property that will be attached to the claim for the purpose of proving the damage are taken only after the claim is initiated in the digital identification system. The ITA has therefore clarified that photographs taken prior to initiating the claim will not be accepted, nor will the claim be able to be completed.
Pursuant to the Property Tax Law, businesses in border settlements, which were impacted due to the security situation, are entitled to file a claim for compensation and receive such compensation for the entire economic damage caused to them.
During the “Iron Swords” War, the ITA allowed businesses in border settlements to take immediate compensation as part of the “advance track”, and receive interim payments on account of the final compensation that was to be calculated in accordance with the provisions of the red track. Thus, businesses that received advances were ultimately required to file a final claim under the red track, by 30 June 2026.
On 15 March 2026, in light of the ongoing security situation and as a consequence of Operation “Roaring Lions”, the ITA published a significant relaxation in this regard: business owners who received an advance in the “Iron Swords” War and had not yet filed a claim under the aforesaid red track, could elect to switch tracks and file their claims under the green-cycle track, instead of the red track.
This move allows affected business owners to receive compensation for loss of profits and comply with the duty of filing a final claim by means of a simpler and quicker process, thereby avoiding the more complicated process of having to do so under the red track.
* The newsflash is intended to provide subscribers with general information only and should not in any way be regarded as firm professional advice and/or a definitive legal opinion.
