Knesset greenlights wartime compensation plan for businesses

The Knesset overnight approved a wartime compensation package to help businesses continue operating, with Israel more than one month into its war with the Hamas terror group.

The Finance Ministry’s compensation aid package includes grants to businesses across the country that have suffered indirect damages due to the war, a salary reimbursement program, and relief measures for employees put on unpaid leave. The cost of the package is estimated at NIS 15 billion ($3.9 billion) from October 7, when war broke out, to the end of November, according to reports in the Hebrew press.

On October 7, some 3,000 terrorists burst into Israel in a shock onslaught and killed over 1,400 people, a majority of them civilians, and took over 240 captives into Gaza.

In the aftermath of the atrocities, Israel vowed to destroy the terror group on its border. Some 350,000 military reservists have been called up, while some 200,000 people have been internally displaced from their homes near the borders with Gaza in the south and Lebanon in the north due to rocket barrages.

The aid package will compensate businesses across the entire country with an annual sales turnover of NIS 12,000 to NIS 400 million that have suffered a revenue decline of at least 25 percent in October or 12.5% over a two-month period to the end of November. These businesses will be eligible for reimbursement of up to 22% of their fixed expenses.

The compensation is determined according to annual sales turnover and the amount of financial damage sustained due to the war.

Businesses with an annual sales turnover of NIS 12,000 to NIS 300,000 will be entitled to a fixed grant depending on the extent of damage. For example, firms with a turnover of NIS 200,000 that earned 40% to 60% less will get a grant of NIS 4,687.5.

Businesses with an annual turnover of NIS 300,000 and NIS 400 million will be entitled to compensation of 7% to 22% of their fixed expenses as well as reimbursement of 75% of their salary expenses.

Businesses and self-employed individuals that are exempt from value-added tax will also be granted a fixed amount. For example, self-employed individuals with an annual turnover of up to NIS 49,800 will receive a grant of NIS 1,750 and those with a turnover of up to NIS 107,000 will get NIS 4,200.

The maximum grant for businesses with a sales turnover of NIS 300,000 to NIS 100 million is NIS 600,000, while for those with a turnover of NIS 100 million to NIS 300 million the grant will increase incrementally to NIS 1.2 million.

Compensation for businesses with a transaction turnover of NIS 300 million to 400 million will be subject to a ceiling of NIS 1.2 million.

The application system for claims is expected to open within 10 days. The Tax Authority will allow the submission of online claims for the grant for 90 days from the opening of the application system.