Protocol on Economic Relations
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Paris, 29 April 1994
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Between  the  Government  of  the  State of Israel and the PLO,
Representing the Palestinian people,

This   protocol  lays  the  groundwork  for  strengthening  the
economic  base  of  the Palestinian side and for exercising its
right  of  economic  decision making in accordance with its own
development  plan  and priorities. The two sides recognize each
other's economic lies with other markets and the need to create
a   better   economic   environment   for   their  peoples  and
individuals'.  'The  Palestinian Authority will levy VAT at one
rate on both locally produced goods and services and on imports
by  the  Palestinians ... and may fix it at the level of 15% or
16%.

In  addition  to  the  points  of  exit  and  entry  designated
according  to  the Article regarding Passages in Annex 1 of the
Agreement  for  the  purpose of export and import of goods, the
Palestinian  side  has  the right to use all points of exit and
entry  in  Israel  designated  for that purpose. The import and
export of the Palestinians through the points of exit and entry
in Israel will be given equal trade and economic treatment.

The  New  Israeli  Shequel (NIS) will be one of the circulating
currencies  in  the Areas (Occupied Territory) and will legally
serve  there  as  means  of  payment for all purposes including
official  transactions. Any circulating currency, including the
NIS  will  be  accepted by the Palestinian Authority and by all
its  institutions, local authorities and banks, when offered as
a means of payment for any transaction.

Banks  in  the  Areas  will  accept NIS deposits. The liquidity
requirements  on  the various kinds of NIS deposits (or deposit
linked  to the NIS) in banks operating in the Areas will not be
less  the  4% to 8%, according to the type of deposits. Changes
of  over  1%  in the liquidity requirements of NIS deposits (or
deposits   linked   to   the  NIS)  in  Israel  will  call  for
corresponding changes in the above mentioned rates.

Israel  and  the  Palestinian Authority will each determine and
regulate  independently its own tax policy in matters of direct
taxation, including income tax on individuals and corporations,
property taxes, municipal taxes and frees.

Each  tax  administration  will  have  the right to levy direct
taxes generated by economic activities within its area.

Both  side  will attempts to maintain the normality of movement
of  labour  between  them,  subject  to  each  side's  right to
determine  from  time  to time the extent and conditions of the
labour  movement  into  its  area.  If  the  normal movement is
suspended  temporarily  by  either side, it will give the other
side  immediate  notification,  and  the other side may request
that the matter be discussed in the Joint Economic Committee.

The  placement  and  employment of workers from one side in the
area  of  the other side will be through the employment service
of  the  other  side  and  in  accordance with the other side's
legislation. The Palestinian side has the right to regulate the
employment   of   Palestinian  labour  in  Israel  through  the
Palestinian  employment service, and Israeli employment service
will cooperate and coordinate in this regard.