One of Israel's more stupid decisions was to try and hold/steal the money. First off, it's clearly Palestinian money, so any holding without agreement is theft- never a good look. Withholding would also affect the working of the West Bank in particular- very much in Israel's interest in perpetuating the occupation. And it gave an urgency and necessity to recognising a State of Palestine. If Israel is going to steal their money any old time it feels like it, then its essential the Palestinians have their own processes and ability to collect/ manage/ finance themselves. Interest should be payable to allow for the inconvenience caused by having kept the funds; and as a penalty for the stupidity.
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Netanyahu: U.S. Vice President Joe Biden may visit Israel in coming weeks (Haaretz)
from the article: Israel to renew transfer of tax funds to Palestinian Authority