Palestine: Investing
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.
| 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 | 2019 | 2020 | 2021 |
|---|---|---|---|
| FDI Inward Flow (million USD) | 132 | 80 | 256 |
| FDI Stock (million USD) | 2,756.0 | 2,717.0 | 2,976.0 |
| Number of Greenfield Investments* | 3.0 | 0.0 | 0.0 |
| Value of Greenfield Investments (million USD) | 347 | 0 | 0 |
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.
| 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% |
| 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.
| Setting Up a Company | Palestine | Middle East & North Africa |
|---|---|---|
| Procedures (number) | 10.00 | 6.28 |
| Time (days) | 43.50 | 19.51 |
Source: Doing Business.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: February 2023
