flag Palestine Palestine: Investing

FDI in Figures

Due to the tense political and security situation of the territory, Palestine attracts scarce FDI beyond aid from the EU, the U.S, and Arab countries. However, Palestine has a market economy in which the private sector plays an important role. Its strategic location and need for the development of large-scale infrastructure make Palestine a largely unexploited market with good investment potential. According to UNCTAD's 2021 World Investment Report, FDI flows to Palestine accounted for USD 52 million in 2020, down sharply from USD 132 million in 2019, due to the economic and health crisis triggered by the Covid-19 pandemic. The stock of FDI was estimated at USD 2.7 billion in 2020. Inbound foreign investment in Palestine is focused on telecommunications, real estate and financial services. Historically, Qatar has been the main investor in the area, followed by Jordan.

In order to attract foreign investment, the Government has established a regulatory framework favourable to investors. Following the principle of non-discrimination, all benefits guaranteed by law are offered to both local and foreign investors, including protection against expropriation, guarantees for repatriation, tax incentives and exemptions, etc. At the same time, however, Palestine lacks a monetary policy due to the absence of its own currency, budget revenues depend on international aid and relations with Israel, and the peace process with Israel is at a standstill, all of which are factors detrimental to international investors. The West Bank and Gaza ranked 117th out of 190 countries in the World Bank's latest Doing Business report, down by one spot from the previous edition. In April 2021, the Biden administration announced the resumption of several forms of aid to the Palestinians that had stopped under the Trump administration, including the allocation of USD 75 million in bilateral Economic Support Fund (ESF) assistance for the West Bank and Gaza. In addition, the Biden administration allocated USD 15 million in International Disaster Assistance for Coronavirus Disease 2019 (COVID-19) for response needs and emergency food assistance in the West Bank and Gaza Strip. Lastly, Palestine was also seeking international financing for the development of its marine gas field, which remains untapped to this day.

 

Country Comparison For the Protection of Investors

  Palestine Middle East & North Africa United States Germany
Index of Transaction Transparency* 6.0 6.4 7.0 5.0
Index of Manager’s Responsibility** 5.0 4.8 9.0 5.0
Index of Shareholders’ Power*** 6.0 4.7 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 25213252
FDI Stock (million USD) 2,756.02,756.02,717.0
Number of Greenfield Investments* 2.03.00.0
Value of Greenfield Investments (million USD) 1283470

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

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Tax Rates

Value Added Tax (VAT)
16% (standard rate).
Company Tax
15%
Withholding Taxes
Dividends: 10%, Interests: 0, Royalties: 0 (residents)/10% (non-residents).
Social Security Contributions Paid By Employers
There are no social security contributions in Palestine.
Other Domestic Resources
Ministry of Finance and Planning
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 
 

Individual Taxes

Personal income tax Progressive rates from 5% to 15%
ILS 1 - 75,000 5%
ILS 75,001 - 150,000 10%
Above ILS 150,001 15%
 
 

Country Comparison For Corporate Taxation

  Palestine Middle East & North Africa United States Germany
Number of Payments of Taxes per Year 28.0 20.8 10.6 9.0
Time Taken For Administrative Formalities (Hours) 174.0 204.0 175.0 218.0
Total Share of Taxes (% of Profit) 15.3 32.1 36.6 48.8

Source: Doing Business - Latest available data.

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Investment Opportunities

Tenders, Projects and Public Procurement
Tenders Info, Tenders in Palestine
DgMarket, Tenders Worldwide
Useful Resources
Palestinian Investment Promotion Agency (PIPA)
Palestine Trade Portal
 

Business Setup Procedures

Setting Up a Company Palestine Middle East & North Africa
Procedures (number) 10.00 6.28
Time (days) 43.50 19.51

Source: Doing Business.

 
 
 

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Latest Update: May 2022