Israel collects about NIS 250 million a month in customs and value-added tax for the Palestinian Authority. After deducting the cost of the electricity, water and medical services it provides to the Palestinians, as well as a 3-percent handling fee, Israel transfers the remainder of the money to the PA.
The funds consist of customs money and value-added tax that Israel levies on behalf of the Palestinians, in accordance with the Israeli-Palestinian Protocol on Economic Relations, an agreement reached in Paris in 1994.
According to the Paris protocol, Israel collects customs for the Palestinians because the Palestinians don't have their own port. The money is generally collected at Ashdod port. In addition, Israel returns to the Palestinians the VAT it collects from Palestinian workers.
The money goes into an account that had been supervised by Salam Fayyad, the Palestinian finance minister until a few months ago, as agreed upon with the United States.