More than 20% of businesses in Israel, 28,351 in total, are still operating without the required permit, despite a business licensing reform meant to simplify and speed up the process, according to a State Comptroller review. The reform took effect in April 2021 and created licensing tracks based on business complexity, with the goal of shortening the time needed to obtain a business license.
The comptroller examined how the reform has been implemented, including the number of businesses operating without opening permits, the time needed for approvals, and the use of accelerated licensing tracks. The findings point to significant problems: many businesses continued to operate without authorization years after the reform began, and fewer than half of eligible businesses used the fast-track process in 2023 and 2024.
The report also says the Interior Ministry does not collect information on implementation and has not set success indicators. It did not publish reports for 2023 and 2024, which were supposed to include data on the business situation in Israel, how many businesses lacked licenses, and why. Because of the missing reporting, it is impossible to determine clearly whether licensing times have actually been reduced. The comptroller recommended resuming the reports, and the ministry said it would examine the recommendation while considering its available resources.
The review also found that the number of local authorities failing to submit business-status reports to the Interior Ministry rose from 19 in 2021 to 42 in 2024, a jump of 121%. In parallel, a national digital licensing system established by the National Digital Agency remains only partially implemented, nearly a decade after a government decision to create it. Only three of six regulators have connected, the Health Ministry, Israel Police, and Labor Ministry, and just 13 of 259 licensing authorities, about 5%, are linked to the system.
