Published on 6/16/2026
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Last update: 19:36 (Mecca time)
More than five years after the launch of reforms to simplify business licensing procedures in Israel, the results of the State Comptroller’s report revealed the persistence of widespread imbalances in the system, with more than a fifth of companies operating without legal licenses, a faltering digitization project, and a decline in the level of government oversight.
The Israeli newspaper “Calcalist” reported, based on the state comptroller’s report, that more than 20% of companies in Israel, or about 28,351 companies, continued to operate without obtaining the required licenses, despite the entry into force of business licensing reforms in April 2021 with the aim of speeding up procedures and reducing bureaucratic burdens.
The report showed that less than half of the eligible companies used shortcuts to obtain licenses during the years 2023 and 2024, while large numbers of companies continued to carry out their activities outside the legal framework. The number of unlicensed companies also increased in the northern region and in the West Bank settlements, although they declined in Tel Aviv, Haifa, the center, occupied Jerusalem, and the south.
Lack of follow-up
The report revealed that the Ministry of Interior did not publish follow-up reports for the years 2023 and 2024, which are supposed to include data on the conditions of companies, the numbers of unlicensed establishments, and the reasons for not obtaining licenses.
The State Comptroller pointed out that the absence of these reports makes it difficult to determine whether the period for obtaining licenses has actually been reduced after implementing the reforms. He recommended that the ministry resume issuing reports, while it responded that it “will study the recommendation, taking into account the resources available to it,” according to the Calcalist newspaper.
Faltering digitization
The report highlighted the stumbling of the digitization project, despite the passage of about ten years since the government’s decision to establish a unified national system for business licenses. According to the newspaper, the digital platform is still in the application stages, and only three regulatory bodies out of six main bodies have been linked to it, which are the Ministry of Health, the Israeli Police, and the Ministry of Labor.
Only 13 licensing authorities out of 259 local authorities, or about 5%, have joined the system so far.
In an additional indication of weak institutional follow-up, the number of local authorities that did not submit reports to the Israeli Ministry of Interior on the conditions of companies increased from 19 authorities in 2021 to 42 authorities in 2024, an increase of 121%.
These data, according to the state comptroller’s report reported by Calcalist, indicate the continued gap between the goals of government reforms and their actual results, in light of the faltering tools of control and digitization and the continued operation of tens of thousands of companies outside legal frameworks.
