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It Is Easier To Do Business In Israel Today Thanks To The Interior Ministry Reform

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Monday, June 22nd, 2020

The Doing Business report provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. Israel rose 19 places on the World Bank’s 2020 ranking, placing 35th after reaching 54th in 2018.​

In this Blog, we have crunched all insights and will spotlight the latest reforms the government has taken in order to make the business process less bureaucratic and more simple. 

Israel improved significantly in four key areas according to the report: starting a business, access to credit, paying taxes, and easing export requirements. 

  • Starting a business made easier by “allowing joint registration of corporate tax and value-added tax”
  • Israel improved access to credit information by “reporting both positive and negative data on individual borrowers”
  • Paying taxes made easier, due to increased digitalization and the improvement of services provided by the Israel Tax Authority: “implementing an electronic system for filing and paying value-added tax and social security contributions” and cost-effective by “reducing the corporate income tax rate” 
  • Israel made exporting easier by “eliminating the certificate of origin requirement, thereby decreasing the time and cost of export documentary compliance.

Part of the reason Israel successfully tackled burdensome regulation, is due to a number of governmental inter-office committees, dealing with regulatory relief, and dedicated to reform the ease of business environment in Israel. The purpose of these committees is to understand the pain points and difficulties and give solutions, remove barriers, and simplify processes.

Israel has captured several important dimensions of the regulatory environment, and made some major improvements to ease the overall processes. New business licencing was one of the main reforms that took place, and a committee was assigned, and dedicated to solve major pain points, and ease the overall process. Here are some of its highlights:

  • Differential Licensing – All licensing items will be divided into 3 groups according to their level of complexity. Every group will have a dedicated procedure to a separate bureaucratic licensing process when the simplest businesses can receive a license and obtain a business license within 21 days from the submission date. 
  • Timetable – Authorities and approving bodies will be given a deadline to answer the granting of the license to the business owner. Not meet these deadlines, the default will be auto-license of the license. 
  • Transfer responsibility to the business owner – The businesses with the least complexity can get a license based on a personal affidavit that met the requirements for running the business. The rationale behind this transfer of responsibility is that a business owner will run his business to the best of his ability and without further intervention of the authorities. 
  • Supervision certainty – Along with the authorities deadline to respond to a business license application, business deficiencies investigations will also be limited. 
  • Transverse Relief – The validity of business licenses on many items will be significantly extended so that the business owner will not need to renew the entire relicensing process.
  • The standard specification – The purpose of the Standard Specification is to specify the terms and documents required by government offices to approve for each type of licensed business. 

Thanks to the new business regulations, doing business in Israel today is easier, and encourages other economies and foreign business sectors to partner towards a more efficient business climate. “This is an important achievement. It must be continued” said Israel’s Prime minister, Benjamin Netanyahu, following the publication of the World Bank report: “The ministries’ work and efforts were welcome and were changing the face of the Israeli economy”.