Starting 2026: Any donation to a non-profit organization that provides a tax credit will be reported to the Tax Authority’s digital donation system

The Tax Authority published today an addendum to the Income Tax Circular detailing the conditions that an association must meet in order to receive approval under Section 46 of the Income Tax Ordinance – approval that grants a tax credit for a donation to that association. According to the published addendum, as of January 1, 2026, all associations that hold approval under Section 46 of the Ordinance will be required to report donations and cancellations of donations, using the Tax Authority’s digital donation system.

Reporting to the digital donation system will be done automatically by the association, using the software in which receipts for donations are produced, provided that this software is interfaced with the digital system. Associations that produce receipts using software that is not interfaced with the digital system or using paper receipts, can report donations using an application on the Tax Authority website.

The purpose of the reporting obligation is to allow the Tax Authority to conduct more effective and tighter supervision in order to ensure that donation funds that come to non-profit organizations that hold a tax benefit permit are indeed used for the purposes for which the permit was granted and for which the non-profit organization was established, to prevent the production of receipts for donations by entities impersonating the non-profit organization, and to prevent cases of the production of duplicate or fictitious receipts for the purposes of money laundering or tax evasion.

In addition, the application of the reporting obligation is expected to assist in the effort to increase the utilization of tax credit rights for donations among the general public. The system saves donors the need to keep paper receipts in order to realize their entitlement to a tax credit for donations, as the receipts are centralized for the donor in his personal area on the Tax Authority website. The information regarding donations is also updated in the information systems used for preparing tax reconciliations, submitting annual reports and tax refund reports, thus saving the donor the need to present the receipts in the personal area to the ministry or upload them to the online tax reconciliation system in order to realize the tax benefit.

In addition, as of the beginning of March 2025, all state employees will be able to receive a tax credit for donations to public institutions that use the system directly on their pay slip , subject to the employee’s approval of the employer to perform the tax credit. This move was made in cooperation with the Accountant General at the Ministry of Finance and will soon be extended to all employers in the economy.