Value-added tax (VAT)
The VAT rate in Palestine is 16% on the deals that are subject to VAT.
VAT on purchases of products, services, and fixed assets, whether related to local sales or to exports, are refundable.
Imported goods are subject to VAT at a rate of 16%. This input VAT can be deducted from the output VAT or can be claimed from the VAT authorities.
Custom duties and purchase tax are imposed based on the type of goods/products imported as well as on the origins of these goods/products.
There are different custom rates and purchase tax for different countries. For example, most imports from the European Union (EU) and from Turkey (due to the free trade agreement between Turkey and Israel) are subject to zero customs, but there is purchase tax on some items.
There are no excise taxes in Palestine.
Property tax is levied at 17% of rental amount on buildings.
Buildings and Lands Tax paid by any person in any year on rented buildings and lands from which one achieved income shall be deducted from gross income or credited against tax liability as follows:
- A deduction in the amount of 40% of the value of property tax paid as expenses.
- A credit in the amount of 60% of the value of property tax paid from the taxpayer’s tax liability according to the provisions of law, provided that the credit shall not exceed the amount of tax paid on rents for the tax period.
There are no transfer taxes in Palestine.
There are no stamp taxes in Palestine.
Employees who are working in Palestine are subject to tax on their wages, salaries, and benefits according to the following yearly brackets and rates:
- From 1 to 75,000 Israeli shekels (ILS): 5%
- From ILS 75,001 to ILS 150,000: 10%
- From ILS 150,001 and above: 15%
Social security contributions
There are no social security contributions in Palestine.