The following are considered to be a resident for tax purposes:
- A Palestinian who continuously or with interruptions resided in Palestine for a period not less than 120 days during the year in which the income is received.
- A Palestinian who was employed during any period of the year by the Palestinian Authority or a local authority, whether inside or outside Palestine.
- A natural non-Palestinian person who continuously or with interruptions resided in Palestine for a period not less than 183 days during the year in which the income was received.
- A legal person that is registered in Palestine and has an office or a branch that it controls and manages.
Permanent establishment (PE)
The Palestinian Income Tax Law does not mention or define the concept of ‘permanent establishment’. This concept is stated in international Double Tax Avoidance Agreements. According to the Palestinian Income Tax Law, income generated in Palestine is liable to tax in Palestine. In order to determine the place where income is generated, the Palestinian Tax Authorities use the same terms that are used in international tax treaties in order to determine whether there is or isn’t a PE.