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Palestine
We have a team of experienced professionals dedicated to supporting all your business requirements—ensuring smooth operations and full regulatory compliance. This strong foundation enables you to confidently establish and grow your business in Palestine with efficiency and assurance.
WHY THE STATE OF PALESTINE?
Palestine, officially the State of Palestine, is a country in West Asia. It encompasses the Israeli-occupied West Bank, including East Jerusalem, and the Gaza Strip, collectively known as the Palestinian territories, or occupied Palestinian territory The territories share the vast majority of their borders with Israel, with the West Bank bordering Jordan to the east and the Gaza Strip bordering Egypt to the southwest.
It has a total land area of 6,020 square kilometres (2,320 sq. mi.) while its population exceeds five million. Its proclaimed capital is Jerusalem, while Ramallah serves as its de facto administrative centre. Gaza was its largest city prior to evacuations in 2023. Palestine is permanent non-member observer state at the United Nations (UN) and is recognized as a sovereign state by 157 of the UN’s 193 member states. Palestine is also a member of several international organizations, including the Arab League and the Organization of Islamic Cooperation, UNESCO, and a delegation of parliamentarians sit at the Parliamentary Assembly of the Council of Europe.
ADVANTAGES
Economic and Business Environment
- Supportive Government Policies: The Palestinian Authority (PA) is committed to creating a business-friendly environment with a comprehensive reform agenda led by the Ministry of National Economy. This includes modernizing laws, such as the new Companies Law, which allows for sole proprietorships and online registration to simplify the entry process for businesses.
- Strong Investor Protections: The legal framework ensures equal treatment for both foreign and domestic investors, guarantees the free transfer of capital and profits, and protects against the expropriation of assets, with insurance against political risk available through agencies like the Multilateral Investment Guarantee Agency (MIGA) and the Overseas Private Investment Corporation (OPIC).
- Favourable Tax Incentives: The government offers significant tax exemptions, with some new businesses receiving up to a 100% income tax exemption for the first five years, followed by nominal rates for an additional period. Fixed assets and necessary spare parts for approved projects can also be exempt from customs duties.
- Developing Infrastructure: Specialized development zones and industrial estates, such as the Jericho Agricultural Industrial Park (JAIP) and the Bethlehem Industrial Park, offer specific incentives like soft loans, grants, and preferential electricity tariffs to attract investment.
Market and Human Capital
- Educated Workforce: Palestine has a young, well-educated, and entrepreneurial population with high literacy rates and IT literacy, providing a skilled talent pool for businesses, particularly in human-capital-intensive sectors like Information and Communications Technology (ICT) and services.
- Strategic Location: Palestine’s central location in the Middle East offers a potential base to access regional markets.
- Access to International Markets: The PA has signed free trade agreements with key global partners, including the European Union, the United States, EFTA states, Turkey, and Mercosur countries, providing duty-free and quota-free access for many Palestinian goods to these large markets.
Growth Sectors
Significant investment opportunities exist in high-potential sectors, including:
- Agriculture and Agro-industries: Known for olives, fruits, and vegetables, the sector benefits from a national export strategy and incentives.
- Information and Communications Technology (ICT): A burgeoning tech scene with startups and a focus on digital transformation creates opportunities for R&D and business process outsourcing.
- Renewable Energy and Water: Opportunities exist in the installation of solar power plants, water desalination, and wastewater treatment facilities.
- Tourism: The historically significant location offers potential for hotel development, cultural and sports facilities, and related services.
TAX REGIME
Corporate Income Tax:
A flat rate of 15% is applied to legal entities, while companies with monopolies or franchises (e.g., telecommunications) are taxed at 20%.
Personal Income Tax:
Applied to residents (staying >182 days), with rates of 5% (up to 75,000 ILS), 10% (75,001–150,000 ILS), and 15% (above 150,000 ILS).
Value Added Tax (VAT):
A 16% VAT rate is applied to goods and services.
Property Tax:
Levied at 17% of net rental/land value (excluding Jerusalem), with a 20% depreciation deduction.
Customs and Clearance Taxes:
Under the Paris Protocol, Israeli authorities collect import taxes and VAT on behalf of the Palestinian Authority, which are transferred monthly, though this process is frequently disrupted, causing fiscal instability.
PALESTINE COMPANIES
Limited Liability Company (LLC):
Offers members limited liability without a minimum capital requirement, making it a popular choice for investors.
Private Shareholding Company (LTD):
Restricts ownership to specific individuals or entities, with shares often requiring approval for transfer.
Public Shareholding Company (PSC):
Involves shareholders with limited liability and requires a minimum capital, often at least $25,000 or 20% of authorized capital.
General Partnership (P.o.C):
Requires a minimum of two partners, with all partners bearing joint and unlimited liability.
Limited Partnership (L.o.c):
Involves both general partners (with unlimited liability) and limited partners (whose liability is restricted to their capital contribution).
Foreign Company Branch (FC):
Foreign entities may operate via a registered branch.
Representation Office (BR):
A, often non-profit or liaison, entity.
Professional Company (OPPC/PLLC):
Specifically for professional services.
Sole Proprietorship:
A new structure introduced for individual business owners.
Contact Us
Get in touch with the right people to get the right help in setting up your business in Afghanistan.
enquiries@chandrawatpartners.com.