In order to facilitate informed debate, NGO Monitor has translated a draft proposed law by MKs Akunis (Likud) and Kirshenbaum (Yisrael Beteinu), discussed in the media on December 1, 2011. We note that, as part of Israel’s democratic processes, the proposal will likely be significantly altered if it advances beyond the initial stages.

In our press release on the earlier versions of the proposed legislation, Prof. Gerald Steinberg stressed that “As NGO Monitor’s detailed research and analysis have repeatedly demonstrated, the multiple legislative proposals are problematic and are probably not effective solutions. This does not mean, however, that real problems do not exist.”

Unofficial translation by NGO Monitor

Income of Public Institutions Receiving Donations from A Foreign State Entity (Legislation Amendments) – 2011

Amendment to the “Amutot Law” [Law of Non Profit Societies – ed.] 1.In the  Amutot Law –1980, in article 36a –
A) Amendment to Article 36a(1) In subparagraph (a), the definition "Foreign State Entity " shall be followed by:
“A restricted Non Profit Society” – A non profit society whose objectives or deeds, explicitly or implicitly, are one of the following:
1.    Reject the existence of Israel as a Jewish and democratic state;
2.    Incite to racism;
3.    Support an armed struggle of an enemy state or a terrorist organization against the state of Israel;
4.    Support the prosecution of Israeli officials, elected representatives, and IDF soldiers in international courts or in the courts of foreign states for actions taken as part of their jobs;
5.    Call for refusing IDF or national service;
6.    Support a boycott of Israel or its citizens.
(2) Subparagraph (a) shall be followed by:
“(a1) A restricted non profit society will not receive donations from a foreign state entity;”
(3) In subparagraph (b1) “non profit society” shall be followed by “that is not a restricted non profit society”.
Amendment to the Income Tax Order 2.In Article 3 of the Income Tax Order (hereinafter - the Order),
B) Amendment to Article 3Subsection (10) shall be followed by:
“(11) Income of a public institution that is a donation from a foreign state entity will be subject to a 45% taxation rate; for this purpose “a foreign state entity” – as defined in article 36a of the Amutot law – 1980.
(12) despite subsection (11), this Article shall not apply to donations to an institution that is funded simultaneously by the state of Israel.
(13) If the public institution is not funded by the state of Israel, according to subsection (12) above, and was not funded during the previous 3 years, the public institution will be allowed to submit a request to the Finance Minister, after approval from the Knesset finance committee, for an exemption from the 45% taxation rate as stated in subsection (11).
Amendment to Article 9 3.In Article 9(2) of the Order, subparagraph (a), the words  “a group of people  in whose control those who operate the business” shall be followed by “except for an income that is a donation from a foreign body, as stated in Section 3,”.”