Verified Facts
The tax rates in Palestine range from 5% to 20% for personal income, with a corporate tax rate of 15% and a value-added tax (VAT) rate of 16%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Palestine has a territorial tax system, which means that individuals and businesses are taxed on their income earned within the country, regardless of their residency status. However, residents are also subject to tax on their worldwide income, with credits available for taxes paid in other countries. To be considered a resident for tax purposes, an individual must have a permanent home in Palestine and spend at least 183 days in the country during the tax year.
The tax system in Palestine is administered by the Palestinian Ministry of Finance, which is responsible for collecting taxes, enforcing tax laws, and providing guidance to taxpayers. The ministry also has the authority to negotiate double taxation treaties with other countries to avoid taxing the same income twice. Currently, Palestine has tax treaties with several countries, including Egypt, Jordan, and the United Arab Emirates.
Personal Income Tax
| Income Bracket (ILS) | Tax Rate |
|---|---|
| 0 - 25,000 | 5% |
| 25,001 - 50,000 | 10% |
| 50,001 - 100,000 | 15% |
| 100,001 - 200,000 | 18% |
| 200,001 and above | 20% |
| The tax rates in Palestine are progressive, with higher income earners paying a higher tax rate. Deductions and allowances are available for certain expenses, such as mortgage interest, charitable donations, and education expenses. Taxpayers are required to file their tax returns by April 30th of each year, and must pay any tax due by the same date to avoid penalties and interest. |
Corporate & Business Tax
- The corporate tax rate in Palestine is 15%, which applies to all companies operating in the country.
- Small businesses with annual turnover of less than ILS 500,000 are exempt from corporate tax.
- Free zones have been established in certain areas of Palestine, offering tax incentives and other benefits to companies that operate within these zones.
- Companies must register with the Palestinian Ministry of Finance and obtain a tax identification number in order to operate in the country.
- Value-added tax (VAT) registration is also required for companies with annual turnover of ILS 100,000 or more.
VAT / Sales Tax
- The standard VAT rate in Palestine is 16%, which applies to most goods and services.
- Reduced rates of 0% and 5% apply to certain goods and services, such as basic food items and pharmaceuticals.
- Exemptions are available for certain goods and services, such as education and healthcare services.
- Tourist refund schemes are available for foreign tourists who purchase goods and services in Palestine, allowing them to claim a refund of the VAT paid.
For Expats & Foreign Workers
- Tax residency rules apply to individuals who spend more than 183 days in Palestine during the tax year.
- Double taxation treaties are in place with several countries, including Egypt, Jordan, and the United Arab Emirates, to avoid taxing the same income twice.
- Social security contributions are required for employees, with the employer and employee each contributing 7% of the employee's salary.
- Remittance rules apply to foreign workers who send money outside of Palestine, with certain restrictions and requirements in place.
- Tax clearance certificates are required for foreign workers who leave Palestine, in order to confirm that all taxes have been paid.
- Work permits are required for foreign workers, and must be obtained before starting work in Palestine.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to tax in Palestine.
- Capital gains tax applies to the sale of assets, such as real estate and securities, with a tax rate of 15%.
- Cryptocurrency is subject to tax in Palestine, with gains from the sale of cryptocurrency considered taxable income.
- Tax deductions are available for investment expenses, such as brokerage fees and interest on loans used to purchase investments.