Israel transfers $116 million in withheld tax revenues to Palestinians

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

Israel collects taxes on goods passing through it to the West Bank on behalf of the Palestinian Authority and transfers the revenues to Ramallah under a long-standing arrangement between the two sides.

Israeli Finance Minister Bezalel Smotrich has been withholding funds for administrative spending in Gaza since the war began on October 7. Israel is also deducting money for electricity, water and the cost of treating Palestinians in Israeli hospitals.

Palestinian officials say the amount is much less than the taxes collected each month even after these deductions.

Smotrich opposes sending the money to the Palestinian Authority, which uses it to pay public sector salaries. He accuses the Palestinian Authority of supporting the October 7 attack. The Palestinian Authority currently pays only 50 to 60 percent of salaries.

Israel also deducts money equal to the total of the so-called martyrs’ allowances, which the Palestinian Authority pays to the families of fighters and civilians killed or imprisoned by Israel.

Smotrich last week agreed to transfer the funds this month after receiving concessions from the Israeli government on sanctions against Palestinian Authority officials and the legalization of five Israeli settlements in the West Bank. The Palestinian Authority said in a statement after its cabinet meeting on Wednesday that its contacts and international pressure led Israel to transfer the funds.

She added that she would push to recover more than six billion shekels of withheld funds to meet her financial obligations.