Kiryat Shmona petitions High Court to extend war compensation for businesses struggling to recover

Kiryat Shmona Municipality has petitioned the High Court of Justice to extend war compensation deadlines for local businesses, arguing the state stopped recognizing losses while the city still struggles to recover from evacuation. The petition challenges eligibility cutoffs under the red track from March 1, 2025, and temporary compensation ending June 30, 2025. The Tax Authority rejected the demand, stating eligibility depends on military restrictions. The municipality seeks recognition of losses from October 7, 2023 through at least December 31, 2026.

Kiryat Shmona Municipality has petitioned the High Court of Justice to extend the period covered by war compensation for local businesses, arguing that the state stopped recognizing their losses while the city was still struggling to recover from evacuation. The petition challenges the end of eligibility under the 'red track' from March 1, 2025, and the June 30, 2025 cutoff for additional temporary compensation arrangements. The municipality argues that allowing residents to return did not restore the customers, workers, and income businesses depended on. It is also seeking a special arrangement to repay compensation advances that businesses had already spent on wages, suppliers, and recovery. The Tax Authority rejected the demand, with director Amir Dahan stating that eligibility depended on military restrictions rather than a formal end to the war. The municipality is asking the court to require recognition of losses from October 7, 2023 until the government announces an end to the fighting, and at least through December 31, 2026. Economic data from a January 2026 Knesset Research and Information Center report recorded 1,242 active businesses in July-August 2023, falling to 881 in the same months of 2024 and recovering to 1,188 in 2025, still 4.3% below the prewar number. The municipality acknowledges the rebound but argues that aggregate turnover does not establish that individual businesses have recovered, particularly after inflation and the costs of restarting operations.