A State Comptroller report says Israel’s business licensing reform has largely failed because ministries and local authorities did not carry it out properly. The report says about 20.5% of businesses in Israel, 28,351 out of 171,000 operating in 2024, are still working without a license, even though the reform was meant to shorten and simplify licensing procedures.
The comptroller places responsibility on both local authorities and government ministries. About 16% of 259 local authorities did not report any business data to the Interior Ministry, and 81.5% did not set up joint service centers for licensing authorities, one of the reform’s central pillars. As of November 2025, only 16 such centers were operating, meaning 211 of 259 authorities had none.
The report also says 51.6% of businesses eligible for a fast-track licensing route did not use it, apparently because they did not know about it. Nearly 95% of local authorities are not connected to the national business licensing system built by the National Digital Agency, and 6.2% have no information system at all, even though up to 10 years have passed since the government decided to create a national platform. Of the six approving bodies supposed to connect, only the Labor Ministry, police and Health Ministry actually did so, while the Agriculture Ministry, Environmental Protection Ministry and Fire and Rescue Service remained disconnected.
The Interior Ministry itself was also criticized for failing to set success metrics, collect implementation data or maintain a full picture of licensing conditions nationwide. The report highlights major gaps between municipalities, noting that Rahat did not submit reports for 2022 to 2024, while Netanya has raised the share of licensed businesses to 83% since the reform began. It also found sharp delays in environmental approvals, including a jump in central Israel from 16 days in 2022 to 82 days in 2024, and an average of 259 days for Health Ministry licensing cases in Jerusalem, which the comptroller called “unreasonable.” Despite the failures, the report says the reform did have some effect, cutting the share of unlicensed businesses from 27% before the reform to 20.5% in 2024, but added that all parties must work together to remove barriers and complete implementation.
