In an unprecedented action, the Knesset Finance Committee has recently recognized an Israeli organization operating abroad as a ‘public institution’ pursunt to section 46 of the Israeli Income Tax Ordinance. Such recognition affords the non-profit organization a tax benefit, by way of a tax credit to donors for their donations granted to that organization.
The aforesaid approval was given to the non-profit organization “Fighters for Life,” an Israeli NPO operating abroad and providing humanitarian assistance to civilians in third-world countries. According to the Finance Committee’s press release, it granted approval to the NPO after the Ministry of Foreign Affairs had conducted examinations and found that the NPO fulfilled the criteria for being classified as an institution entitled to a tax benefit, since its objects clearly serve national interests.
This approval is a practical demonstration of the criteria that the Israel Tax Authority uses when considering whether to recognize an NPO as a ‘public institution’ pursuant to section 46 of the Income Tax Ordinance as reflected in a circular issued last year by the ITA, which also included, for the first time, the option to grant such tax benefit also to Israeli organizations operating abroad.