Israel and Palestine Sign Tax-Collection Agreement

Article Summary
An agreement signed this week by Israel and the Palestinian Authority joins the Authority's territories with Israel for the purposes of tax collection, meaning that Israel will collect taxes on goods headed for the West Bank and then transfer the money to the Palestinians. This may pave the way for future agreements, writes Shimon Shiffer.

Even half a loaf is better than none. This phrase could very well sum up the first agreement, signed last night [July 31], between the Netanyahu government and the Palestinian Authority.

‎The signing ceremony for upgrading the economic ties between Israel and the Palestinian Authority was scheduled to take place two weeks ago. Palestinian Prime Minister Salam Fayyad was already en route to Jerusalem for a meeting with Finance Minister Yuval Steinitz. Yet in a not-uncommon turn of events, everything went awry. A suicide bomber attacked a bus of Israeli tourists in Burgas, and as a result the ceremony was called off. Last night the sides were able to reach the moment of signing without incident.

‎The commercial ties between Israel and the Palestinian Authority are based on the Paris Protocol signed in 1994 between then-finance minister Avraham (Beige) Shohat and senior Palestinian official Nabil Shaath. The main tenet of the agreement is the determination of the Authority's territories as a joint unit with Israel for the purposes of tax collection. That meant that Israel would collect taxes on goods headed for the West Bank and then transfer the money to the Palestinian finance ministry.

‎The new understandings will enable the Palestinians to collect their own taxes in two areas — fuel and goods. A pipeline from Israel to the West Bank will be laid, and the tax will be collected directly by the Palestinians at the end points. With regard to goods, ‎it was agreed that they would be transferred from Israeli ports to customs stations in the West Bank, where the Palestinians would collect the taxes directly into their coffers. It was further agreed to set up a joint technological system that would combat illicit capital, contraband and tax evasion on either side of the border.

‎Having lasted a year and culminating in yesterday's agreement, the talks were conducted secretly between representatives of the Israeli Finance Ministry and their Palestinian counterparts. This may herald the possibility of reaching further agreements even at a time when no peace negotiations for the establishment of a Palestinian state are taking place, showing that when there are common interests, preconditions can be put aside and accords can be reached.

Found in: tax evasion, palestinian, pa, israel, fuel, economic, agreement

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