New Plan Aims to Help New Businesses Beat Bureaucracy

Finance Minister Moshe Kahlon (L) seen with Prime Minister Binyamin Netanyahu announce the new plan for small businesses, December 27, 2015. Photo by Marc Israel Sellem/POOL
Finance Minister Moshe Kahlon (L), seen with Prime Minister Binyamin Netanyahu, announces the new plan for small businesses, Sunday. (Marc Israel Sellem/POOL)

The government on Sunday approved a plan to streamline the process for the establishment of new businesses, with the aim of reducing bureaucracy and making it easier to begin earning money. According to Prime Minister Binyamin Netanyahu, the plan “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.”

As part of the plan, payments of income taxes and value-added tax (VAT) fees will be collected in the first year of a business’s existence only when payments are made by customers. Under current tax laws, businesses are required to report income from sales when a sale is made – but often they cannot collect for between 60 and 90 days, meaning that business owners have to dig into their own pockets in order to pay taxes on income that has not yet materialized.

The new rules will allow business owners to postpone reporting income from sales until the money is actually paid, for the first year of a business’s existence. Penalties associate with late reporting will be suspended as well.

In addition, Netanyahu has ordered that rules for licensing of buildings and offices be streamlined to significantly speed up the granting of licenses for new businesses. The Economy Ministry Small Business Agency will hire new workers to man hotlines, where experts will be available to guide business owners through the morass of bureaucratic rules.

Netanyahu said that he had developed the plan together with “ my friend, the finance minister,” Moshe Kachlon. Commenting on the plan, Kachlon said that the plan “will reduce the gaps between the rights of wage-earners and independent workers, and will assist small businesses as they get started. One-third of small businesses close after only a year. Bureaucracy is not a decree of Heaven.

“We cannot have a situation where a small business owner spends his day bouncing from government office to office instead of developing his business and seeing to the livelihood of his employees,” added Kachlon. “Meanwhile time passes, the bills accumulate and he still has to deal with bureaucracy. Our plan will ease conditions for businesses and begin 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, and today we are doing that.”

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