Palestine taxes resident and non-resident individuals on Palestine-source income only (a territorial system for individuals) under Income Tax Law No. 8 of 2011, while corporations are taxed on their local taxable income regardless of residence status. The standard corporate income tax rate is 15% (20% for telecom and monopoly businesses), administered alongside the distinctive Paris Protocol tax clearance structure described elsewhere on this page.
Per PwC's dedicated Palestinian Territories tax summary, the tax year is the calendar year; individual tax returns are due by 30 April of the following year, and self-employed individuals with income from other sources must file within 4 months of the tax year-end. The statute of limitations for assessment is 4 years.
Palestine's headline corporate income tax (CIT) rate is 15% (20% telecom/monopoly).
The headline personal income tax (PIT) rate is 15%.
The standard VAT/GST (or equivalent consumption tax) rate is 16%.
Individual residency uses a distinctive dual, nationality-based day-count test under the governing Income Tax Law No. 8 of 2011 - a Palestinian individual is resident if they have resided and maintained principal business activities in Palestine for 120 days during the year, while a non-Palestinian individual requires 183 days. Both residents and non-residents are taxed only on Palestine-source income (a territorial system for individuals). A corporation is resident if incorporated in Palestine or managed and controlled in Palestine; both resident and non-resident entities are taxed on their local taxable income.
Distinctive structural feature - the Paris Protocol tax clearance system: Israel collects taxes on behalf of the Palestinian Authority under a tax clearance arrangement and transfers them monthly - this typically accounts for roughly 70-75% of the PA's total revenue, making it the PA's single largest income source. Israel has on occasion withheld these transfers. Under the Paris Protocol, the PA has no jurisdiction in Area C of the West Bank; income taxes paid there by Israeli settlers and soldiers flow directly to the Israeli treasury rather than to the PA, while income taxes of Palestinian workers employed within settlements are collected by Israel and remitted to the PA without deduction. This is a genuinely distinctive administrative structure not found elsewhere on this site - Palestinian taxation is not simply administered by a single unified domestic authority collecting its own revenue.
A non-resident entity operating through a permanent establishment in Palestine is subject to the standard 15% corporate rate on the income attributable to that establishment, consistent with corporations being taxed on their local taxable income regardless of residence status as described elsewhere on this page; the Paris Protocol's Area C carve-out (also described elsewhere on this page) means income taxes on activity physically located in Area C of the West Bank flow to Israel rather than to the Palestinian Authority, a distinctive jurisdictional feature that affects where PE-attributable profits are actually taxed in practice.
No CFC-style attribution provision was found in the Palestinian territories' tax legislation. PwC's Worldwide Tax Summaries' dedicated Palestinian Territories chapter - a detailed, actively-maintained profile covering corporate other-taxes, VAT, and withholding provisions - describes no CFC mechanism among its anti-avoidance-adjacent coverage. No transfer taxes or stamp taxes apply in Palestine either, consistent with a comparatively narrow domestic tax base overall.
No statutory thin capitalization ratio is identified in available sources.
Palestine classifies entities under Income Tax Law No. 8 of 2011 rather than offering an elective check-the-box system, and no ATAD2-style anti-hybrid mismatch regime addressing double-deduction or deduction-without-inclusion outcomes has been identified, consistent with no CFC-style attribution provision being found in Palestinian tax legislation, as described elsewhere on this page; PwC's Worldwide Tax Summaries' dedicated Palestinian Territories chapter does not describe a CFC mechanism among its anti-avoidance-adjacent coverage.
No domestic FBAR-equivalent regime requires Palestinian residents to separately disclose foreign financial accounts, and Palestine's CRS/AEOI participation status is not confirmed in available primary sources; confirm current status directly with the Palestinian Authority's tax administration before relying on this page. US persons remain independently subject to FinCEN Form 114 (FBAR) and potentially Form 8938 regardless of Palestine's own rules.
A dedicated participation exemption regime for dividends or capital gains from a qualifying subsidiary is not identified in available sources; no transfer taxes or stamp taxes apply in Palestine, consistent with a comparatively narrow domestic tax base overall as described elsewhere on this page.
No comprehensive double tax treaty network is identified for Palestine in available sources, as described elsewhere on this page; a broader general unilateral foreign tax credit mechanism is similarly not confirmed, and relief from double taxation for Palestinian taxpayers with foreign-source income should not be assumed available and should be confirmed directly with the Palestinian Authority's tax administration.
No comprehensive double tax treaty network is identified in available sources. Most imports from the European Union and from Turkey (via the Turkey-Israel free trade agreement) receive zero customs duty treatment.