Government approves compensation plan for businesses impacted by Iran conflict

By Ariela Karmel

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1 July 2025, 6:39 pm

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Ariela Karmel is a political correspondent at The Times of Israel. She previously reported for Calcalist and Haaretz. She holds an MA in Middle Eastern and African History from Tel Aviv University and a BA in Political Science from the University of British Columbia.

The scene where a ballistic missile fired from Iran hit and caused damage in Tel Aviv, June 16, 2025. (Erik Marmor/Flash90)

The government greenlights a plan for compensating businesses and their employees who were financially impacted by Israel’s 12-day war with Iran.

Spearheaded by Finance Minister Bezalel Smotrich, the plan provides grants for small businesses and partial reimbursements for expenses and wages at medium and large companies that suffered revenue losses during May or June.

Businesses with an annual revenue of NIS 12,000 ($3,552) to NIS 400 million ($118 million) will be compensated. According to earlier reports, businesses that saw a 25% decrease or more in revenues during the war would be compensated from the Property Tax Compensation Fund.

The plan also includes tailored adjustments to the model to support employees placed on unpaid leave due to the war. They are to receive payments from the National Insurance Institute and not be forced to use any of their vacation days.

The Finance Ministry says the goal is to provide “as broad a safety net as possible” and ensure continuity, particularly for smaller businesses.

“Our message to the citizens of Israel is clear: we defeated Iran on the battlefield and we will win economically as well,” says Smotrich in a statement. “A strong economy is an inseparable part of national security, and the implementation of this compensation plan for businesses across the country proves that the State of Israel not only stands firm — it stands with its citizens. We will continue to strengthen our economic resilience and act with responsibility, determination and solidarity.”

The Knesset still needs to approve the plan, but once it does so, and VAT reports are submitted for the relevant period, the Tax Authority will open the online system for filing claims.