Palestinian territories

Corporate - Income determination

Last reviewed - 12 January 2020

Inventory valuation

Inventory is valued on a cost basis, and preparation of financial statements is done in accordance with International Financial Reporting Standards (IFRS).

Capital gains

The income tax law does not include special treatment for capital gains; consequently, capital gains are treated like any other income. Income tax is imposed on capital gains according to the percentages mentioned in the Taxes on corporate income section.

Dividend income

The profits from dividends distributed by a resident are exempted from income tax.

Interest income

Income tax is imposed on interest income according to the percentages mentioned in the Taxes on corporate income section.

Rental income

Income tax is imposed on rental income according to the percentages mentioned in the Taxes on corporate income section.

Royalty income

Income tax is imposed on royalty income according to the percentages mentioned in the Taxes on corporate income section.

Partnership income

Income tax is imposed on partnership income according to the percentages mentioned in the Taxes on corporate income section.

Unrealised gains/losses

Unrealised gains are not taxable.

Stock transactions

Listed companies

For listed companies, a rate of 100% of the profits from buying and selling stocks and bonds is exempted from income tax, provided that no expenses are allowed for deduction on this rate of exempted profits.

Private companies

For private companies, a rate of 25% of the profits from buying and selling stocks and bonds is exempted from income tax, provided that no expenses are allowed for deduction on this rate of exempted profits.

Foreign income

Income earned abroad is exempted unless originating from the taxpayer’s funds or deposits in Palestine.