Power to tax
Page 2, Article II, Preparatory Transfer of Powers and Responsibilities
1. Israel shall transfer and the Palestinian Authority shall assume powers and responsibilities from the Israeli military government and its Civil Administration in the West Bank in the following spheres: education and culture, health, social welfare, tourism, direct taxation and Value Added Tax on local production (hereinafter “VAT”), as specified in this Agreement (hereinafter “the Spheres”).
Page 8, Article XI, Budgetary Issues,
3. Israel shall continue to provide the services of Israeli experts currently employed in the fields of income tax and VAT to ensure a smooth transition and efficient establishment of the taxation system of the Palestinian Authority. The terms of their employment shall be agreed upon by the two sides.
4. The Palestinian Authority will do its utmost to establish its revenue collection system immediately with the intent of collecting direct taxes and VAT.
5. The two sides will jointly approach the donor countries during the upcoming meetings of the Consultative Group and of the Ad Hoc Liaison Committee, scheduled for September 8 through 10, 1994 in Paris, with a request to finance the shortfall that may be created in the collection of the direct taxes and the VAT during the initial period while the Palestinian Authority establishes its own revenue collection system.
... 7. The CAC will provide the donor countries, when necessary, with information to
help adjust the allocation of contributions as a result of variations in tax collection.
... 10. The inclusion of the sphere of VAT in the spheres to be transferred to the
Palestinian Authority shall constitute the adjustment referred to in paragraph (3) of the Agreed Minute to Article VI(2) of the Declaration of Principles, and no further
adjustment shall be required.
Page 9, Annexes, Schedule 1, provides tax revenue budget in table format.
Page 11, Appendix A, Laws, Regulations and Military Orders in the Sphere of Education and Culture,
... 16. Regulations regarding the Education Tax, No. 1, 1956
... 23. Order regarding Education Tax (Judea and Samaria), No. 501, 1972
[Summary] Page 19, Annex 5, Protocol Concerning Preparatory Transfer of Powers and Responsibilities in the Sphere of Direct Taxation, provides extensive provisions for direct taxation including territoriality.
Page 21-22, Appendix A, Laws, Regulations and Military Orders in the Sphere of Direct Taxation
1. Income Tax Law, No. 25, 1964, except article 74(1), and as follows (article numbers relate to Hebrew version): 28(a)(4)-(5) - will apply to civil examinations (not to criminal investigations); 29b, 34a(a)(2), 34a(d), 49(3), 54(3), 57, 63(c)-(d), 64, 66(4) - will be subject to the principles regarding tax enforcement; 44(1) - will not apply to the military government, the Civil Administration and their employees; 21, 62, 63(c), Chapter 16 - will be subject to the principles regarding the tax enforcement;
2. Regulations regarding Depreciation for Income Tax Purposes, No. 15, 1965
3. Regulations regarding Income Tax Deductions at Source from Salaries, No. 16, 1965
4. Regulations regarding Income Tax (Bookkeeping), 1988 (which adopted the regulations regarding Bookkeeping, 1985)
5. Regulations regarding Income Tax (Forms Required for Deductions at Source), 1987
6. Regulations regarding Income Tax (Determining Payments for Services or Goods and for Contracting as an Income), 1978
7. Regulations regarding Income Tax (Deduction at Source from Payments for Services or Goods and for Contracting), 1978
8. Regulations regarding Income Tax (Determining Payments for Construction Work and Shipping as an Income), 1986
9. Order regarding Encouragement of Capital Investment, No. 1342, 1991 - with regard to income tax exemptions; except for articles 26, 27 and 28 29 and 30 - will be subject to the principles regarding tax enforcement
Page 22, Annex V, Protocol Concerning Preparatory Transfer of Powers and Responsibilities in the Sphere of Direct Taxation, Appendix B, 3. Tax Collection,
For the purpose of tax collection, the Palestinian Authority shall be authorized to take
the following measures:
a. attachments not relating to immovable property effected by the service of documents without requiring any physical action, such as bank accounts;
[Summary] Page 24-27, Annex VI,Protocol Concerning Preparatory Transfer of Powers and Responsibilities in the Sphere of VAT [Value Added Tax] on Local Production provides extensive provisions for the devolvement of VAT regulation, but setting a low bar of 16%, registration of businesses, jurisdiction of the PA and military government regarding VAT, VAT regulations of imports and exports and establishing a a joint committee on VAT.
Page 27, Appendix A, Laws, Regulations and Military Orders in the Sphere of VAT
1. Law of Excise on Local Production, No. 16, 1963, except for the following articles (Hebrew Version): 2(A), 2(B), 2(E), 3, 6A(2), 6A(5), 6A(6), 6A(8) 6A(7) - will be subject to principles regarding the tax enforcement
2. Regulations Regarding Excise on Local Production (Judea and Samaria), 1985, except for the following articles (Hebrew Version): 2, 33, 118, 137, 147, 127 31(A)1, will not apply in relation to authorizing use of “other document” 53 (B), 70, 85, 86, 87A, 89, 92, 94, 103, 116, 116A(D)-(E), 117, 119(D), 129(C), 139(B) - will be subject to the principles regarding tax enforcement 35(A)2, 35(A)3, 112, 115A, 116A(C), 119, Chapter 16, 139(A) - will be subject to principles regarding tax enforcement
3. Regulations regarding Bookkeeping (Judea and Samaria), 1985
4. Notification regarding Excise on Local Production (designating Egypt as bordering country) (Judea and Samaria), 1987
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