ISRAEL-PLO PROTOCOL ON ECONOMIC RELATIONS
SUMMARY OF MAIN POINTS
(Communicated by Finance Ministry Spokesman)
Israel and the Palestinian Authority will have an import policy basically similar in all respects regarding imports and customs. Nonetheless, the Palestinian Authority will be able to import mutually agreed goods at customs rates differing from those prevailing in Israel following jointly agreed import procedures. Moreover, it will be able to import goods from Arab countries, in agreed, limited quantities. Arrangements will be made for the two customs authorities to jointly operate the border crossing in Jericho and Gaza.
The Palestinian Authority will establish a monetary authority, whose main functions will be the regulating and supervision of the banks operating in the area, the determination within certain limits of the liquidity raitos on deposits, the management of foreign exchange reserves and the supervision of foreign exchange transactions.
The two sides will continue to discuss the possibility of issuing various alternatives of a Palestinian currency. To encourage trade, they will mutually allow the opening of bank branches. Until then, the NIS will continue to constitute a legal means of payment in the autonomy’s areas side by side with other currencies.
The Palestinian Tax Administration will conduct its own direct tax policy, including income tax on individuals and corporations, property taxes and municipal rates and fees, according to the policy and the rates determined by the Palestinian Authority.
The two parties will collect income taxes on economic activities conducted in their respective areas. Israel will transfer to the Palestinian Authority 75 percent of the revenues from thueir income tax collected from Palestinians employed in Israel.
A VAT system similar to that operating in Israel will be operated also by the Palestinian Authority.
The VAT rates of the Palestinian Authority will be between 15 and 16 percent.
Work in Israel is essential for the Palestinians expanding their employment opportunities. The guiding principle in this sphere is to enable mutual movement of labor.
The rights of Palestinian workers empployed in Israel will be preserved according to arrangements existing in Israel, a social secuirity system being established in the meantime by the Palestinian Authority.
Agriculture produce from the autonomy will enter Israel freely, except for five goods on which agreed import quotas have been imposed for five years: tomatoes, cucumbers, potatoes, eggs and broilers.
There will be free movement of goods manufactured in the area.
A Palestinian tourist administration will be set up to manage subjects related to tourism in the areas of the Palestinian Authority. Tourists will move freely between Israel and the autonomy.
Tourist agencies, touring companies and tourist guides will be able to operate ‘on the other side’ provided they satisfy the relevant professional criteria.
The price of gasoline in the autonomy will be determined according to the autonomy’s costs in purchasing it, and the taxes levied on gasoline in the autonomy. The agreement stipulates that the prices of gasoline will not fall short by more than 15 percent of the maximum gasoline price in Israel.
The agreement deals with two main topics:
a. The full transfer of the licensing and supervision authority over the insurance business in the areas of the Palestinian Authority.
b. An agreement for the compulsory insurance of motor vehicles and the compensation of the victims of road accidents based:
– The Palestinian Authority maintain in its area a system of compulsory insurance of motor vehicles in the form existing in Israel, but with limited compensation.
– Policies issued by the Palestinian Authority being valid also in Israel, and victims there being compensated according to the Israeli laws; and Israeli policies being valid in the areas of the Palestinian Authority.