Israel Approves Transferring $750 Million in PA Tax Funds to Palestinians

Israel will continue to deduct 600 million shekels from the sum, the amount transferred by the PA to 'terrorists who were detained in Israel as well as to their families and to released prisoners,' according to Israeli law

Noa Landau
Noa Landau
Palestinian President Mahmoud Abbas in Ramallah, January 2020
Palestinian President Mahmoud Abbas in Ramallah, January 2020Credit: Majdi Mohammed/AP
Noa Landau
Noa Landau

The Israeli security cabinet approved on Sunday to transfer 2.5 billion shekels in tax funds it has been holding for the Palestinian Authority as part of a resumption of cooperation between the two.

Israel will continue to deduct from that sum 600 million shekels, the amount that is transferred by the PA "to terrorists who were detained in Israel as well as to their families and to released prisoners," according to an Israeli law that was passed in 2018 and put into effect in February 2019. The PA has refused to accept the funds since.

Haaretz podcast: Will Trump's purged Pentagon let Israel attack Iran?Credit: Haaretz

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.

Credit: Hussein Al Sheikh
Credit: Hussein Al Sheikh

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

In May, Palestinian President Mahmoud Abbas announced the PA would suspend all agreements and understandings signed with Israel and the United States, affecting both security and civilian issues.

However, soon after Joe Biden's win in the 2020 U.S. Presidential Election, Palestinian Civil Affairs Minister Hussein al-Sheikh said earlier in November that the PA would accept the funds from Israel following a meeting held between the two sides.

According to al-Sheikh's statements on Twitter, in the course of his meeting with the "Israeli side," "[i]t was agreed to transfer all financial dues" to the PA – a reference to the tax transfers amounting to some 3 billion shekels ($890 million) that Israel has been withholding from the PA, whose economy has been hard hit by the coronavirus pandemic."

Al-Sheikh announced on Twitter that the PA had agreed to resume coordination with Israeli authorities after the PA had been given assurances that Israel would respect its agreements with the Palestinians, during "international negotiations conducted by the president."

According to al-Sheikh's tweet, those assurances were reinforced at the meeting, where it was "emphasized that the bilateral agreement signed, which are based on international legitimacy, are what governs this relationship."

Al-Sheikh also said in his two-part tweet that at the meeting, the PA delegation had rejected Israel's policies with respect to settlements, demolishment of homes and confiscation of lands – the implication being that no agreement was reached with the Israeli team on the matter.

"It was agreed to hold another meeting soon," al-Sheikh added.

Despite al-Sheikh's insistence that "all financial dues" will be transferred, Haaretz has learned that such transfer of funds required the approval of Israel's government, which was granted on Sunday.

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