Tax Treaties in Palestine
Cross-border taxation in Palestine covers how the country taxes foreign investments, income from abroad, and transactions between related parties. This guide provides an overview of the key rules and considerations for international investors.
Withholding Taxes
Palestine imposes withholding tax on payments to non-residents:
| Income Type | Domestic Rate |
|---|---|
| Dividends | 0% |
| Interest | 0-15% |
| Royalties | 10-15% |
| Service Fees | Applicable rate |
| Rental Income | Applicable rate |
Tax Treaties
Palestine has limited double tax treaty coverage. The Palestine Liberation Organization (PLO) and Palestinian Authority (PA) have signed a limited number of agreements, but these are not generally recognized internationally. As of 2026, tax treaty coverage remains minimal.
Transfer Pricing
Palestine follows the arm's length principle for related-party transactions. Transfer pricing documentation is required for:
- Transactions exceeding specified thresholds with related parties
- Intellectual property transactions
- Financing arrangements
Foreign Tax Credit
Resident taxpayers can claim a foreign tax credit for taxes paid abroad on foreign-source income. The credit is limited to the Palestinian tax payable on that income.
Exchange of Information
Palestine participates in international tax cooperation to a limited extent. The country has signed some Tax Information Exchange Agreements (TIEAs).
Inbound Investment
Foreign investors in Palestine are subject to:
- CIT on Palestine-source income at 15%
- Withholding taxes on distributions
- Approval requirements for certain sectors
Outbound Investment
Palestinian residents investing abroad are taxed on their worldwide income, with foreign tax credits available.