The following overview provides core tax regime data for companies operating in Palestine as of 2025, including corporate tax rates and notable surcharges that may apply to specific sectors. The information focuses solely on corporate taxation as applied to Palestinian entities.
Key Corporate Tax Rates and Regime Features in Palestine (2025)
For 2025, Palestine applies a corporate tax regime with a flat tax structure to companies. This means all qualifying corporate income is subject to a single, uniform tax rate, regardless of overall profits generated during the fiscal period. A targeted surtax applies for certain businesses, primarily those in monopoly or franchised sectors.
Corporate Tax Rates and Surtaxes
| Description | Rate (%) |
|---|---|
| Standard Corporate Tax Rate | 15% |
| Surtax for Telecom, Franchise, and Monopoly Companies | 5% |
The primary corporate tax is charged at a flat rate of 15% of taxable corporate income, payable in New Israeli Shekels (ILS). For telecommunication companies and those firms operating under a franchise or monopoly within the Palestinian market, an additional 5% surtax applies to their taxable profits, making their effective tax rate 20% for qualifying income streams.
Tax Assessment Basis
The assessment basis for corporate taxation in Palestine is strictly corporate. Only registered companies are subject to this regime; individual income or personal tax rates are governed by separate statutes.
Tax Structure Overview
- Rate Type: Flat (no income brackets apply)
- Currency for Payment: ILS (New Israeli Shekel)
- Additional Surtax: 5% for franchise, monopoly, and telecom firms
No differentiated tiered brackets are in place for corporate tax in 2025. All business types—aside from those specifically named in the surtax provisions—pay the same flat rate. The absence of a bracketed system simplifies compliance for most companies but can lead to significantly higher total tax obligations for monopolistic or franchised operations.
Applying Surtaxes in the Palestinian Corporate Environment
Certain strategic industries—such as telecommunication providers and companies holding exclusive franchise or monopoly rights—face an additional 5% surtax on their profits. This measure targets businesses that typically enjoy reduced competition or market-protected status in the Palestinian economy. The application of this surcharge is straightforward and cumulative, simply adding to the standard 15% base rate, resulting in a total possible tax rate of 20% for relevant entities.
Comparison Table: Corporate Tax Obligations in Palestine (2025)
| Company Type | Base Rate (%) | Surtax (%) | Total Possible Rate (%) |
|---|---|---|---|
| Standard Companies | 15% | 0% | 15% |
| Telecom/Franchise/Monopoly Companies | 15% | 5% | 20% |
Additional Regulatory Considerations
There are no specific holding period requirements for corporate tax purposes based on available data. Palestine’s flat rate structure and limited use of sectoral surtaxes mean that, for most companies, the main area of focus is reporting accurate taxable income and determining if industry-specific rules (such as the 5% surtax) apply.
All payments must be made in ILS. For international enterprises or accounting, the 2025 average exchange rate is approximately 1 ILS = $0.27 USD (rates may fluctuate), making the 15% tax on 1,000 ILS equivalent to a tax liability of 150 ILS (about $41 USD at this rate).
Pro Tips for Navigating Corporate Tax in Palestine
- Confirm Surtax Applicability Early: If your Palestinian operations fall within telecom, franchise, or monopoly sectors, review whether the 5% surtax applies to any segment of your profits. Early identification helps avoid unexpected tax exposures.
- Use Currency-Adjusted Reporting: Pay close attention to ILS–USD conversions (or your reporting currency) for internal accounting, particularly for consolidated international reporting requirements.
- Maintain Clear Documentation: Ensure all revenue streams and sectoral activities are clearly delineated in your company’s financial records. This is especially important if only a portion of your business is subject to the additional surtax.
- Monitor Regulatory Updates: Sectoral surtaxes and base rates may change. Regularly consult official government resources such as palestinecabinet.gov.ps for updates to the Palestinian corporate tax code.
In summary, businesses in Palestine are subject to a straightforward corporate tax regime in 2025, with a flat 15% rate and a targeted 5% surtax applied only to telecom, franchise, and monopoly holdings. The absence of tiered brackets simplifies budgeting and compliance for most companies, while those in strategic or protected sectors need to plan for higher effective rates. Always ensure accurate sector classification and timely payment in ILS, checking frequently for any amendments to the legislative environment.