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Israel transfers $560m of withheld taxes to the PA

Israeli TV channel KAN reported on Thursday that the occupation authorities have transferred two billion shekels (around $560 million) of withheld taxes to the Palestinian Authority, which will help to cover its budget deficit. The channel cited PA officials in its report.

The PA's current financial crisis is caused in part by Israel withholding the tax revenues that it collects on behalf of the Palestinians. KAN said that the transfer of funds to the PA followed a meeting between PA officials and the Israeli authorities about this issue.

According to a member of the Central Committee of Fatah and PA Minister of Civil Affairs Hussein Sheikh, the end of the oil tax crisis between the PA and Israel came after "painstaking negotiations". This does not mean the end of the financial crisis, though, "as billions of our funds are still held by Israel," he added on Twitter.

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Earlier in the day, PA Prime Minister Mohammed Shtayyeh announced that 60 per cent of the authority's employees' salaries for August and 50 per cent of salaries for February, the first month of the current financial crisis, have been paid.

In March, Israeli Finance Minister Moshe Kahlon decided to deduct 42 million shekels a month from Palestinian clearing funds across the year. The clearing revenues are taxes levied by Israel, on behalf of the PA Ministry of Finance, on goods imported to the occupied Palestinian territories. On average, this amounts to around $188 million per month, from which Israel deducts three per cent as a fee.

Israel passed a law in this respect in protest against the PA's payment of stipends to Palestinian prisoners held in Israeli jails, as well as the families of "martyrs" and freed prisoners "deported" to the Gaza Strip. For months now, the PA has not paid these stipends; no official reason has been given.

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