Hearing session with Ministry of Finance by civil society on VAT draft law
September 01, 2022

Ramallah – Civil society organizations, headed by MIFTAH, recently completed discussions on the Value Added Tax (VAT) bill with the Customs, Excise and VAT Department and the gender unit at the Ministry of Finance. The discussions are part of MIFTAH’s strategic course of action aimed at impacting public policies to guarantee citizens’ rights for all sectors of Palestinian society, to enhance the principles of good governance in official institutions and promote social justice in developing fiscal policies.

On behalf of CSOs, MIFTAH presented further comments to those previously presented on the most recent version of the VAT draft law, which included the following:

  • Article 4, Paragraph 1, stipulates tax exemption for all non-profit organizations, yet Paragraph 2 of Article 4 stipulates: “The tax shall be imposed on non-profit organizations according to rates within the provisions of Article 2 of this law, to any activities that compete with the private sector.” This achieves the goal of the private sector in subjecting institutions to other taxes, on the premise that these are profitable activities, which compete with the private sector.

  • A call to amend Article 2, by preparing a list that reflects tax progression rates on commodities and services, to promote fair distribution, particularly regarding VAT reduction on basic commodities and services; the list will be included as an addendum to the law.

  • Articles in the penal code were pointed out, which lack principles of the rule of law towards the ‘employer”, demanding that its provisions abide by the provisions of the amended Palestinian Basic Law.

MIFTAH commented that while it appreciated the demands previously made, the abovementioned comments were key to promoting social justice in fiscal policies.

Meanwhile, representative for the Customs, Excise and VAT Department, Loay Hanash, said his department was open to discussions and cooperation with civil society to implement amendments to the articles in consultation with CSOs, maintaining that the following amendments were positively received:

  • Amendment to Article 4, Paragraph 2 of the bill, which stipulates: Taxes shall be imposed on non-profit organizations according to tax rates within the provisions of Article 2 of this law, on any activities that infringe on the private sector.”

  • An agreement that MIFTAH, in consultation with CSO’s, will prepare a list of commodities and VAT percentages towards achieving social justice, through progressive tax rates. The Ministry of Finance said it was prepared to adopt this within the framework of the law.

Within this context, MIFTAH stressed on fostering a dialogue-conducive environment with government and official parties as a foundation for influencing public policies and for adopting social justice as a basis for developing policies and influencing decision-makers in favor of citizens’ rights, which guarantee the protection of rights for marginalized and underprivileged social sectors.