Israel transfers $116 million of withheld tax revenue to Palestinians

Israel transferred 435 million shekels ($116 million) of withheld tax revenue to the Palestinian Authority, the first such transfer since April, the Israeli and Palestinian finance ministries said on Wednesday.

Israel collects tax on goods that pass through Israel into the West Bank on behalf of the Palestinian Authority and transfers the revenue to Ramallah under a longstanding arrangement between the two sides.

Since the Hamas-led attack on Israel on October 7, Israeli Finance Minister Bezalel Smotrich has withheld sums earmarked for administration expenses in Gaza. Israel also deducts funds for electricity, water and costs to treat Palestinians in Israeli hospitals.

Even after these deductions, Palestinian officials say the amount is far below taxes collected each month.

Opposing sending funds to PA

The ultranationalist Smotrich has been opposed to sending funds to the PA, which uses the money to pay public sector wages. He accuses the PA of supporting the October 7 attack in Israel led by the Islamist terror organization Hamas, which controls Gaza. The PA is currently paying 50%-60% of salaries.

Israel also deducts funds equal to the total amount of martyr payments, which the PA pays to families of militants and civilians killed or imprisoned by Israeli authorities.

Smotrich last week agreed to the transfer this month after gaining concessions from Israel's cabinet on sanctions against PA officials and legalizing five Israeli settlements in the West Bank.

The PA said in a statement from its cabinet meeting on Wednesday that its contacts and international pressure led to Israel transferring the funds and that it would push to recover more than 6 billion shekels of withheld funds to meet its financial obligations.