At its weekly meeting today the Cabinet approved Prime Minister Benjamin Netanyahu’s and Finance Minister Moshe Kahlon’s plan to ease conditions for new businesses, which was formulated by the Prime Minister’s Office, led by Director General Eli Groner, along with the Finance and Economy ministries. Today’s decision is in continuation of the Prime Minister’s directive, at the 18 October 2015 Cabinet meeting, to ease regulatory demands on new businesses in their formative period.
Prime Minister Netanyahu:
"As Economy Minister, I am submitting – along with my friend, the Finance Minister – a proposal that is big news for small businesses, a plan that will make it dramatically easier for anyone who opens a new business, in the first three years. Small businesses are bending under the bureaucratic burden, under a burden of regulations, fees and other restrictions that we impose on them. We are going to free them from most of this burden in order to allow them to grow. Small businesses are a considerable growth engine and we know that this will, of course, lead to greater employment and to our economic development. Therefore, this step is vital and innovative. I think that it is a correct and important economic step."
Finance Minister Kahlon:
"This government has set for itself the goal of dealing with the widening gaps in Israeli society. Last week, a wage agreement was signed that breaks a years-old distorted mold that only widened the gaps.
At a time when the strong took packages, the weak were compelled to suffice with crumbs. We have changed the system. Today, we are submitting a plan that will reduce the gaps between the rights of wage-earners and independents and will assist small businesses at their outset. One-third of small businesses close after only a year. The bureaucracy is not a decree of fate or from Heaven. It cannot be that a small business owner goes around all day among authorities instead of developing his business and seeing to the livelihood of his employees. Meanwhile time passes, the bills accumulate and he is dealing with the bureaucracy. Our move today will ease conditions for businesses and start to correct decades-old distortions. It will help businesses develop and will support economic growth. We will not resolve all of the problems in one day but a start must be made. Today we are getting started."
Prime Minister’s Office Director General Groner:
"We are fighting against a surplus of regulation; small businesses are suffering from the regulatory yoke on a daily basis. This is a significant step in our overall policy of lowering the regulatory burden and we will continue until we reach the proper balance for an economy that aspires to grow and fulfill its potential."
Finance Ministry Director General Shai Babad:
"The success of small businesses is a central component in the growth of the Israeli economy. Therefore, all of the relevant government agencies have formulated a plan that will ease conditions for new small businesses and will assist them in concentrating on building their businesses. We will continue to improve things for businesses in Israel from registration to opening the business, on behalf of the entire Israeli economy."
In the context of the plan:
1. Easements vis-a-vis the fees a business owner is required to pay in the first year, in order to prevent a situation in which the business is paying fees even before it starts its commercial activity and as a condition for it, and to act toward a situation in which fee payments come only after the business has fiscal returns and a current flow.
2. Administrative enforcement measures will be coordinated for the new business based on the assumption that a new business is likely to inadvertently err in its first days. Burdensome penalties must be enforced only after fair warning has been given regarding the correction of mishaps and in order to avoid a situation in which the cost of future penalties leads to critical harm that threatens future commercial activity.
3. To this end, Prime Minister Netanyahu, as Economy Minister, updated the Cabinet on a series of easements regarding the employment of workers by new businesses which, in their first days, are in a dynamic process of establishment and organization that requires flexibility in the employment of workers.
4. Planning and construction processes will be shortened in order to ease conditions for obtaining permits when the building in which a business is to be established is already in an area that permits commercial activity.
5. Business licensing – In coordination with the Interior Ministry, an evaluation will be made of the possibility of applying minimal obligations to a new business and the gradual application of full obligations and additional easements. Similarly, legal details will be accompanied by a practical guide that will make legal terminology more accessible and understandable to the entrepreneur, who will then find it easier to comply with the legal instructions.
6. The Economy Ministry Small Business Agency will operate a support network to assist new businesses in understanding and complying with the regulatory demands involved in building a business.