Tax Authority Demands 238M NIS Refund from Northern Businesses Amid Compensation Delays
The Israel Tax Authority demands the return of 238.4 million NIS in war compensation advances from thousands of northern businesses, while many owners report severe bureaucratic delays and ongoing financial distress.
The Israel Tax Authority has transferred approximately 5.8 billion NIS in compensation to businesses in the north affected by the Iron Swords War, with nearly 4 billion NIS allocated to businesses in confrontation-line communities that were evacuated for roughly a year and a half. However, the authority is now demanding the return of about 238.4 million NIS from 3,751 business owners who received compensation or advances for damages, including some 184.3 million NIS from 2,991 businesses in the northern border zone. These figures emerge from data provided by the Tax Authority at the request of Globes.
"My business shut down because it did not survive the war," says Sh., a tourism business owner from the north who was evacuated from his home. When the business attempted to resume operations, it failed to recover and ultimately closed. "I claimed 70,000 NIS in compensation under the red track for the year and a half the business was closed and for the adjustment period when we were allowed to return home and to the business. They gave me advances of 56,000 NIS, and now, after submitting the final claim, they informed me that most of the claim is rejected and they are demanding a refund of 36,000 NIS on the advances I received — and I have nowhere to pay it from."
2,292 Claims Under Initial Review
In about a week and a half, three years will have passed since the October 7 events and the outbreak of the war. Ostensibly, the war has ended, but for some businesses in the north, the feeling is that they are still trapped in the financial abyss it created. "The north has not recovered, and incidents keep happening here. When the war ended and we returned to the communities, the war with Iran began. Meanwhile, we are still waiting for our compensation," says a business owner from northern Israel.
As part of the Iron Swords War, the Ministry of Finance and the Tax Authority's Compensation Fund, headed by Amir Dahan, established three primary compensation frameworks for indirect damages, categorized by business location and the extent of damage. The first was the red track, intended for businesses located in border settlements and northern border communities that were evacuated, designed to provide full compensation (100%) for lost profits or actual loss of income.
The second framework was the green track (for special areas and confrontation lines), which included compensation caps and was divided into a turnover track (compensating for the percentage drop in turnover) and a payroll track (compensating employers who paid full wages to employees absent from work).
The third compensation framework is the eligible expenses track / business continuity grant, which included a broad grant for a significant drop in activity (usually greater than a 25% drop in turnover). Simultaneously, dedicated tracks were opened for agriculture, a nationwide evacuee payroll track, and tailored tracks for IDF reservists.
The total volume of claims submitted in the north stands at 121,302 across all tracks. Of these, 100,539 claims have been received and closed to date, 9,488 claims were rejected during initial handling, in addition to 2,540 objections that were rejected, and 701 claims remain in objection or appeal proceedings before the Tax Authority (188 in objection, 513 in appeal). Furthermore, there are another 2,292 compensation claims from business owners that have not yet been deliberated and remain under initial review.
"I Haven't Received Compensation for Iron Swords Yet"
The opportunity granted to northern businesses to submit compensation claims for the war ostensibly closed only recently when the "red track" was concluded in August 2026. However, many northern business owners have already submitted final compensation claims starting from 2024, following their return to evacuated settlements. Some report that they are still awaiting final compensation or are locked in a battle with the Tax Authority over the sums due to them, all while taking out loan after loan to keep their heads (and their businesses) above water.
"To this day, I have not received the compensation I am owed," says a business owner from one of the evacuated northern settlements. "We were evacuated for a year and a half from our homes and received advances of 30% of the compensation, but it is not enough. To this day, we lack full livelihoods. We have been taking loans for years to get close to what we earned and survive. I submitted a compensation claim of about 200,000 NIS and have received only 40,000 NIS in advances to date, of which 15,000 went to the accountant who filed the claim. These sums are only for Iron Swords, excluding the war with Iran because that hasn't been processed either. You closed compensation for everyone across the country. Why do you still hold us in the north as hostages?"
"Not Enough Manpower to Cope"
According to Tax Authority data, 41,745 claims were submitted by northern business owners in 2024, with processing completed for 34,705 of them. Only 46 claims remain under processing (pending a hearing or in initial review). In 2025, 9,566 claims were submitted, and processing for 7,816 of them was completed, with 193 claims still in initial review. In 2026, 342 claims were submitted, and 210 were completed, leaving 116 claims still under discussion and initial review. The numbers show that most files have been handled, but on the ground, northern businesses and their representatives paint a grim picture regarding the processing of claims.
CPA Yizhar Kana, managing partner at Fahn Kanne Grant Thornton, whose firm represents hundreds of northern business owners in compensation claims, notes that "there are those who submitted claims two years ago and are still being messed around with. Businesses suffering from bureaucratic drag and denied proper compensation are far from isolated cases."
He adds that "the Tax Authority cannot keep up with the volume of work required; it lacks the physical capacity to do so. In June 2024, I submitted a compensation claim for the damages incurred by our accounting firm, which leases premises in Kibbutz HaGoshrim—a closed military zone—and to this day I have not even been summoned for a hearing. The problem is that the authority has no deadline for processing claims and there is no statute of limitations. I can wait another 15 years and I will manage, but other entities, under general pressure, are being pushed into reaching agreements and accepting compensation lower than what they deserve, which then shows up in statistics as a handled claim that makes the numbers look good."
According to Kana, out of about 120 compensation claims he filed on behalf of northern businesses, only 40 have been closed. "Dozens of my clients are left without a response. Almost all received advances, but they are waiting for answers regarding full compensation, and the answers do not arrive," he states. "Meanwhile, the authority exerts pressure on them to compromise, and they hold a lot of power. If it suits you, take it; if it doesn't, fight us for five years. The legislature committed a crime by not setting a deadline for them. Businesses are captives of the Tax Authority."
A tax expert who has submitted dozens of compensation claims describes a similar reality. "I secured an initial advance for another large northern business only two months ago regarding Iron Swords. I am constantly facing the Tax Authority in appeal committees and fighting all day for clients. This is a war for businesses to survive after the war. The authority threatens us: reach an agreement with us and it will end faster, or we will drag you through the mud."
He points out that the core malignancy is the manpower shortage. "All compensation for the agricultural sector in the State of Israel is handled by two people at the Tax Authority. Businesses have no one to talk to, and the Tax Authority has been begging the Ministry of Finance for three years for manpower to handle the compensations. The director of the Compensation Fund, Amir Dahan, is a professional who has been working 24/7 for three years and wants to handle everything properly, but he lacks sufficient manpower to cope with all the claims."
The Tax Authority responded: "Compensation Fund employees are handling an unprecedented volume of claims with great dedication. Since we did not receive the details of the businesses mentioned in the article, it was not possible to verify the claims."
