Israel to Transfer Tax Funds to PA After Deducting Sum Slated for Security Prisoners

In February Israel froze $140 million of Palestinian tax money as part of a policy implementation aimed to offset the money Ramallah pays security prisoners detained in Israel

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Palestinian President Mahmoud Abbas chairs a meeting of the Palestine Liberation Organization (PLO) Executive Committee in the West Bank city of Ramallah, October 3, 2019.
Palestinian President Mahmoud Abbas chairs a meeting of the Palestine Liberation Organization (PLO) Executive Committee in the West Bank city of Ramallah, October 3, 2019. Credit: AFP

Israel will transfer tax revenues to the Palestinian Authority collected on its behalf, funds which Ramallah originally refused after the Israeli government withheld part of the sum equivalent to the amount paid by the PA to prisoners detained in Israel and their families.

The decision was made during a meeting on Thursday between Israeli Finance Minister Moshe Kahlon and Palestinian treasury officials, and was announced Friday by Palestinian Civil Affairs Minister Hussein Al-Sheikh on Twitter.

"I have met with the #Israeli Minister of #Finance and have discussed all outstanding issues. We have reached an agreement to activate joint committees to examine all issues which will commence their duties next Sunday," Al-Sheikh wrote.

"The agreement was also on transferring a payment from the #PA’s financial dues. The dispute remaines over the salaries of the families of #prisoners and #martyrs. We are determined to pay their dues at all costs," he added.

Israeli officials familiar with the details of the agreement have told Haaretz that the financial crisis with the PA has ended. Despite Ramallah's continued claim that they oppose the deduction of funds earmarked for security prisoners held in Israel, as well as their families and those who have been released.

>> Read more: The Palestinian economy is collapsing. Its future depends on Israel | Analysis

In February, Israel's defense cabinet decided to freeze 500 million shekels ($140 million) of PA tax money due to the fact that the PA, according to data presented by defense officials, had transferred the aforementioned sum provided by Israel to terrorists who were detained in Israel as well as to their families and to released prisoners.

Under the 1994 Paris Protocol, which established a customs union between Israel and the Palestinian Authority, Israel is supposed to collect value-added tax, import duties and other taxes on the PA's behalf and hand them over on a monthly basis.

Israel controls all international crossings, meaning the PA cannot have any independent import or export arrangements. Withholding funds contravenes the Paris Protocol.

In mid-February, the security cabinet passed a resolution that put the 2018 law into effect for the first time. The 2018 law calls to freeze the funds in order to offset the money the PA pays convicted terrorists detained in Israel and to their families and released prisoners.

According to data presented by defense officials, the PA each year transfers 1.2 billion shekels ($333.3 million) to security prisoners and their families, constituting 7 percent of the PA’s budget.

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