Guidance

Doing business in the Palestinian Territories: Palestinian Territories trade and export guide

Updated 11 May 2015

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Find out how UK companies can control risks when doing business in the Palestinian Territories.

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1. Palestinian Territories export overview

The Palestinian Authority is concentrating on creating a legal framework for business. This will help to facilitate the establishment of commercial projects and apply to both direct and indirect foreign investment.

Contact a Department for Business and Trade (DBT) Palestinian Territories export adviser for a free consultation if you’re interested in exporting to the Palestinian Territories.

UK businesses already operating in the Palestinian Territories include well-known companies like BG Group, HSBC and PWC. Smaller, specialist UK companies also operate there.

Benefits for UK businesses exporting to the Palestinian Territories include:

• free trade agreement with the European Union (EU) for industrial products
• reduced duties on EU agricultural exports to the Palestinian Territories
• English widely spoken
• established contacts in the United Arab Emirates (UAE) can be a route into the Palestinian Territories

Strengths of the Palestinian Territories market include:

• geographical location is a point of contact between 3 continents – Europe, Asia and Africa
• entrepreneurial tradition in wholesale and retail trading
• highly educated, multilingual labour force

2. Challenges

There are certain unique challenges when doing business in or with the Palestinian Territories. These include:

• economy heavily reliant on foreign aid
• access and movement restriction imposed by the Israeli authorities
• import / export restrictions (particularly in relation to Gaza)
• access to land
• high transportation costs
• land/property registration

Read the latest Overseas Business Risk report for the Palestinian Territories.

3. Growth potential

3.1 Economic growth

Gross Domestic Product (GDP) was estimated to be USD 7.5 billion in 2014.

The Office of the Quartet Representative (OQR) has been developing an economic initiative which aims to rapidly grow the Palestinian economy. Implementation depends on bilateral agreements and cooperation from Israel. Studies have estimated that if it was not for the restrictions, the Palestinian economy would be 80 to 85% bigger.

International donors, including the Department for International Development (DFID), are working with the Palestinian Authority to give the technical assistance needed for state building. DFID’s new Palestinian Market Development Programme aims to strengthen trade and investment links.

3.2 Free trade agreements

The EU and Palestinian Liberation Organization (PLO) signed an interim association agreement on trade and cooperation in 1997. This established reciprocal duty free treatment on industrial products complying with the rules of origin. A later agreement granted liberalised trade in agricultural products, processed agricultural products and fish and fishery products.

The Palestinian Authority has signed a number of other agreements to regulate commercial relations and cooperation including:

• trade agreements with Jordan and Egypt allowing bilateral customs exemptions and reduced duties on specific products
• the Arab Presidents’ Summit in 2001, which agreed to give Palestinian products free access to Arab markets
• cooperation agreements with the governments of Morocco and Tunisia in different areas

4. UK and the Palestinian Territories trade

Figures for direct trade between the UK and the Palestinian Territories are hard to obtain as Israel controls the borders of the Palestinian Territories. The majority of Palestinian importers and exporters use trade partners in Israel to facilitate their shipments.

UK’s main exports are:

• machinery
• consumer products
• industrial oil
• automobiles
• construction materials

5. Opportunities for UK businesses in the Palestinian Territories

Department for Business and Trade (DBT) provides free international export sales leads from its worldwide network. Search for export opportunities.

5.1 Aid funded business

The Palestinian economy is heavily reliant on foreign aid. This aid provides essential services for nearly half of the Palestinian population living in the West bank and Gaza. It allows the Palestinian Authority to operate and pay its employees.

There are opportunities for UK companies via donor aid programmes in:

• public finance / administration and law
• infrastructure, including power generation, water and wastewater treatment
• healthcare, including consultancy and equipment
• humanitarian assistance

Find more information about the DBT Aid Funded Business Service.

Contact Britain.jerusalem@fco.gov.uk for more details about emerging business opportunities.

5.2 Agriculture

There are opportunities for UK companies to supply equipment and consultancy for Palestinian Authority projects which aim to:

• expand the number of wastewater treatment plants
• invest in high value crops
• develop an export hub in Dubai

Contact Britain.jerusalem@fco.gov.uk for more information on opportunities in Palestinian Territories in the agriculture sector.

5.3 Information and Communications Technology (ICT)

The Palestinian Authority aims to:

• engage with multinational companies for Research and Development (R&D)
• develop training and business process outsourcing
• launch an e-government initiative
• develop a technology hub

There are opportunities for UK companies to supply equipment and consultancy for these projects. ICT projects also offer opportunities in terms of ‘Arabising’ content and services, making it more applicable to the market.

Contact Britain.jerusalem@fco.gov.uk for more information on opportunities in Palestinian Territories ICT sector.

5.4 Tourism

The Palestinian Authority aims to implement Jericho and Bethlehem development plans to establish a world class hotel school.

Opportunities would be created for:

• urban master planning
• architectural engineering and design
• hotel management, training and marketing

Contact Britain.jerusalem@fco.gov.uk for more information on opportunities in the Palestinian Territories tourism sector.

5.5 Energy

There are opportunities for UK companies to supply consultancy and equipment for Palestinian Authority projects which aim to:

• install solar Photovoltaic (PV) panels for residential, commercial and industrial use
• build power stations in West Bank and Gaza
• increase awareness of renewables via an alternative energy education park

Contact Britain.jerusalem@fco.gov.uk for more information on opportunities in the Palestinian Territories energy sector.

6. Start-up considerations

You cannot perform any business unless registered with the Companies’ Registrar who then recommends the registration to the Ministry of National Economy.

Foreign companies interested in operating in the market are required to register as foreign companies, or branches of foreign companies.

You can also appoint a local representative, distributor or agent to enter this market.

Contact Britain.jerusalem@fco.gov.uk for help in finding potential local partners to represent your company / products.

7. Legal considerations

UK companies entering into agreements in the Palestinian Territories should undertake professional legal advice.

The Palestinian Authority issued Law No 1 of 1998 on the Encouragement of Investment in the Palestinian Territories. It was amended in Presidential Decree No 2 in 2011.

7.1 Standards and technical regulations

The Palestinian Standards Institute (PSI) has responsibility for metrology, standards and quality assessment.

7.2 Intellectual property (IP)

The Palestinian Authority has observer status at the World Intellectual Property Organization (WIPO).

The Civil Complaints Law of 1933 currently regulates IP in Gaza. The Commercial Law No.19 of 1953 and the Patents Law No. 22 of 1953 regulates the West Bank.

The Palestinian Protection of Intellectual Property Rights Law is in draft. It includes:

• copyright and related rights
• intellectual property including patents
• licences
• publishing rights
• other rights that distinguish between publishing rights and copyrights

8. Tax and customs considerations

The Palestinian Authority has issued an amended Income Tax Law (No.17 of 2004) to promote investment in the Palestinian Territories.

The new tax law has:

• unified the legal framework in both parts of the country
• expanded the tax base by decreasing exemptions
• reduced rates
• unified the income tax rate on all commercial establishments

Contact Britain.jerusalem@fco.gov.uk to enquire about the latest tax rates.

8.1 Tax incentives

The 1998 Investment Promotion Law and its amendment support the development of industrial free zones. It also gives special incentives for investors, including certain income and customs tax exemptions.

The Palestinian Investment Promotion Agency provides more information on investment in the Palestinian Territories.

8.2 Customs

The Palestinian Ministry of Finance in Ramallah is responsible for customs.

8.3 Documentation

A EUR1 movement certificate is needed to support claims for preferential rates of duty in the Palestinian Territories resulting from the EU-Palestine agreement.

9. Entry requirements

Entry to the Palestinian Territories, including by sea to Gaza is controlled by the Israeli authorities. Your passport must be valid for a minimum period of 6 months from the date of entry into Israel and the Palestinian Territories.

You do not need a visa to enter Israel as a tourist. You can stay for up to 3 months.

If you’re entering the country for the purpose of working in the Palestinian Territories, you may be refused entry. You must produce a passport and immigration slip, to cross between Israel and the Palestinian Territories.

9.1 Travel advice

If you’re travelling to the Palestinian Territories for business, check the Foreign & Commonwealth Office (FCO) travel advice beforehand.

10. Contacts

Contact the Trade and Prosperity Team at the British Consulate General in Jerusalem for more information and advice on opportunities for doing business in the Palestinian Territories.