Abbas lifts Gaza tax exemption, threatening further economic woes
After taking over administrative control of the Gaza Strip, President Mahmoud Abbas has abolished tax exemptions in a bid to get more revenue from Gaza to balance expenses, disregarding the harsh economic conditions in the besieged enclave.
GAZA CITY, Gaza Strip — President Mahmoud Abbas issued a presidential decree dated Jan. 3 to reinstate the collection of taxes on the Gaza Strip. This decree abolished two previous decrees — one issued in 2007 and another from 2017 — exempting all citizens in the governorates of the Gaza Strip from paying taxes and fees.
Article 3 of Abbas’ freshly issued decree states that the decree shall be submitted to the Palestinian Legislative Council in Ramallah and put to a vote in order to be endorsed at a future session.
The taxes to be reimposed in the Gaza Strip include the 17% Value Added Tax (VAT) on imports, the 20% income tax imposed on companies, the income tax on citizens, and other local taxes and levies such as the property tax and the tax on cigarettes. This is in addition to the increase in customs duty.
When Hamas took over the Gaza Strip in 2007, the Palestinian Authority (PA) in Ramallah exempted Palestinians in Gaza from paying taxes on government transactions, income tax and VAT to limit local revenues to the Hamas-led government in Gaza. Now, after the PA took administrative control of the Gaza Strip under the Palestinian reconciliation agreement, the abolition of the tax exemption would increase its revenues to balance its expenses. All taxes paid by the Palestinian citizens will be transferred to the consensus government.
