Deputy Prime Minister Dr Tonio Borg welcomed the signing of a trade and tax agreement by Palestinian Premier Salam Fayyad and Israeli Finance Minister Yuval Steinitz on Wednesday. Israel and the Palestinian Authority signed agreements earlier this week to regulate bilateral trade and taxation.
The agreements are meant to facilitate implementation of existing economic agreements, particularly the 1994 Paris Protocol, in order to expand bilateral trade and combat smuggling and tax evasion. They will also upgrade the Palestinian Authority’s tax collection infrastructure, thereby increasing its revenues. Tariffs and customs duties are Palestine's biggest source of income, after international aid. The EU is still its major donor.
The agreements state that with regard to value-added tax, purchase tax and customs duties, Israel and the Palestinian Authority will settle their accounts on the basis of actual transactions rather than reported transactions, as was the case previously. This will require them to improve their sharing of data.
The agreements will take effect on January 1, 2013. Implementation will be monitored by a team of experts from both sides, to be set up in the coming days.
''This is another step forward in promoting Palestinian economic development and in improving relations between the Palestinian Authority and Israel,'' Minister Dr Tonio Borg said.