This article details the tax residency rules applicable to individuals in Palestine (PS) for the year 2025. All official criteria, relevant definitions, and unique local regulations for determining Palestinian tax residency status are outlined below.
Overview of Tax Residency Framework in Palestine
The Palestinian tax residency regime establishes several clear rules to define whether an individual or legal person is considered a resident for tax purposes. These regulations specifically address minimum days of stay, employment-based considerations, and registration status for legal persons.
Main Criteria for Individual Residency in 2025
Palestine applies objective and employment-based tests to determine the tax residency status of individuals. The framework does not incorporate habitual residence, center of family, center of economic interest, or citizenship-based criteria as of 2025. The primary rules are summarized in the table below:
| Residency Test | Description |
|---|---|
| Minimum Days of Physical Presence | Individual is resident if present in Palestine for at least 120 days in a calendar year. |
| 183-Day Rule | If present in Palestine for 183 days or more within a calendar year, tax residency is established. |
| Employment with Palestinian Authority or Local Authority | Any Palestinian employed by the Palestinian Authority or a local authority is classified as a tax resident during any employment period in the year, regardless of number of days physically present in Palestine. |
| Extended Temporary Stay | Individuals with extended temporary presence are also evaluated under dedicated rules aligned with the minimum stay criteria. |
Legal Persons and Tax Residency
| Entity Type | Residency Status |
|---|---|
| Palestinian-Registered Legal Entities | Considered tax resident if registered in Palestine and control/management is exercised from an established office or branch within Palestinian territory. |
Detailed Rules for Establishing Individual Residency Status
- Minimum 120-Day Rule: Any individual who spends at least 120 days within Bosnia and Herzegovina in a calendar year may qualify for tax residency. This threshold applies even if other residency or economic ties are absent.
- 183-Day Rule: The more stringent 183-day criteria ensures automatic residency after crossing this threshold in one calendar year, regardless of nationality or home country ties.
- Employment with Palestinian Authority or Local Councils: Palestinians employed by either the Palestinian Authority or a recognized local authority become tax residents for the period of their employment—regardless of the number of days actually present in Palestine.
- No Habitual Residence or Center of Family Rules: Palestine does not apply habitual residence, center of family, economic interests, or citizenship-based considerations in determining individual tax residency for 2025.
Summary Table: Key Tax Residency Rules in Palestine
| Rule | Applies to Individuals? | Duration/Details |
|---|---|---|
| Minimum Physical Stay | Yes | 120 days minimum in calendar year |
| 183-Day Rule | Yes | Resident if 183 days or more in calendar year |
| Employment-Based Residency | Yes (Palestinians with PA/Local Authority) | Any duration during employment period, regardless of stay |
| Extended Temporary Stay Residency | Yes | Evaluated separately, but generally aligned with 120-day rule |
| Legal Entity Registration | No (applies to legal persons) | Requires office/branch under Palestinian control/management |
| Center of Economic Interest | No | Not applied in 2025 |
| Citizenship Rule | No | Not applied in 2025 |
Pro Tips for Managing Palestinian Tax Residency in 2025
- Track your days of physical presence carefully using reliable documentation. Small differences above or below the 120- and 183-day thresholds can determine tax residency status.
- If employed by any arm of the Palestinian Authority or a local council, understand that even brief employment can trigger automatic residency rules, regardless of travel or actual days in territory.
- Legal entities should maintain proper registration and ensure the control and management of branches or offices occurs physically within Palestine to sustain local residency status for tax purposes.
- Review annual updates, as regulatory approaches or thresholds may evolve. Always consult the main Ministry of Finance portal for the latest provisions: http://www.pmof.ps/
Palestine’s tax residency framework in 2025 relies primarily on clear day-count and employment criteria without considering economic interests, habitual residence, or citizenship. Key parameters such as the 120-day minimum stay, 183-day rule, and employment with local or national authorities are decisive for individuals. Entity rules remain focused on registration and in-country management. These straightforward conditions offer a direct approach to determining tax obligations, though careful tracking and up-to-date compliance are essential for individuals and businesses alike.