Database

Under the Supervisor of Banks’ Regulation No. 357 on Information Technology Management, breach notification obligations apply in the financial sector.

Israel's Privacy Protection Act requires that public agencies, financial institutions and companies mainting five or more databases must appoint a data security officer. Addtionally, each database needs to have a “database manager”, who by default is the company’s CEO.

As of May 2018, the Privacy Regulations also require that the data security officer must be directly subordinate to the database manager, or to the manager of the entity that owns or holds the database, to ensure his/her independence.

According to Israel's Privacy Regulations (Data Security) 5777-2017 at least once every 18 months the owners of high-level security databanks must conduct a survey of the databank’s data security, analyze the security risks, and correct the errors identified. Such owners are also responsible for testing the susceptibility of the databank systems to internal and external security risks.

The Protection of Privacy Regulations of 2001 permit transfers to: EU Member States; other signatories of Council of Europe Convention 108; and a country “which receives data from Member States of the European Community, under the same terms of acceptance”. Transfers to other countries are permitted:
- subject to data subject consent;
- from an Israeli corporate parent to a foreign subsidiary; or
- provided the data importer enters into a binding agreement with the data exporter to comply with Israeli legal standards concerning the storage and use of data.

Furthermore, the Privacy Protection Regulations (Data Security) 5777-2017 stipulate that engaging an outsourced data processing provider requires pre-engagement due-diligence review of the risks entailed in the engagement. The contractual engagement shall address issues such as the purposes for which the data will be used, the type of data processing to be performed, the period of engagement and return of the data upon conclusion of the engagement.

There are labour market tests for intra-corporate transferees (ICT), contractual service suppliers (CSS) as well as independent service suppliers (ISS). Moreover, ISS must show a special relationship with Israel. Executive managers are exempted from labour market test in GATS.

The Israel telecom sector is liberalized and competition rules apply. However, the original incumbent (Bezeq), controls the copper-based last mile. Yet, it is obliged by law to unbundle.

It is reported that the Israeli government does not consider unauthorized use of software by enterprises to be a crime in Israel. For deterrence, the industry must rely on the possibility of compensatory or statutory damages. However, according to the International Intellectual Property Alliance (IIPA), no court has ever awarded the maximum statutory damage award of NIS100,000 (approx. 27,000 USD).

The Copyright Act (2007) replaced the doctrine of fair dealing with that of fair use, thus providing a more flexible approach to copyright exceptions. Moreover, the Trade Policy Review report clarifies that the manner in which the 2007 Act is drafted "could support the interpretation that fair use is a permitted use and not merely a defense".

According to the OECD, in Israel the chair of the board of directors of Israeli corporations must be a resident of Israel.

According to the OECD, in Israel 75% of the board of directors in fixed domestic licensed communications companies must be Israeli citizens and residents. In the case of mobile phone and international communications services, the nationality and residency requirements apply to the majority of board members.

In Israel, restrictions apply to international fixed telecommunication services (up to 74% foreign equity participation is allowed) and wireless telecommunications services (up to 80% foreign equity participation).

Although Israel is a signatory to the WTO Government Procurement Agreement (GPA), its coverage schedules do not include "telecommunications related services" (CPC 754), which is an important service sector for digital trade.

Israeli tendering regulations allow for price preferences to local suppliers. Domestic suppliers with a domestic content of at least 35% are eligible for up to 15% price preference in all international tenders (except for tenders covered by the WTO Agreement on Public Procurement).

Reportedly, Israel grants preferences to domestic Israeli bidders and applies offset provisions. Israel has offset requirements that it implements through international cooperation (IC) agreements. Under IC agreements, foreign companies are required to offset government contracts by agreeing to invest in local industry, co-develop or co-produce with local companies, subcontract to local companies or purchase from the Israeli industry. Since January 2009, the IC agreements offset percentage for procurements covered by Israel’s obligations from the WTO Government Procurement Agreement (GPA) has been 20% of the value of the contract. For procurement which is excluded from GPA coverage, the offset is 35%, while for military procurement the offset is 50%.

In April 2016, the Israeli Tax Authority published a draft circular proposing a change to its VAT legislation which would oblige foreign tech firms to register in Israel to account for VAT on digital services sold to consumers.