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Palestinian Territories : Impact of Fiscal and Economic Policies - Estimation of VAT Tax Gap (English)

The relatively low level of tax revenues is a key policy issue facing Palestinian policymakers. The general government revenues to GDP ratio in the West Bank and Gaza is significantly below the world average, the Middle East and North Africa (MENA) average, and the average of emerging and developing countries in Europe. Further to the request by the Minister of Finance, the World Bank team launched an assessment of several aspects of tax policy in the West Bank and Gaza. This analytical piece was going to have three parts: a microsimulation model for income tax on wages, another microsimulation model for income tax on profits, and the VAT GAP model. While this report covers the third component, the other two are dependent on a level of systematization of data which currently does not exit. Manual entry of data into the Revenue Management System (RMS) is generating a lot of missing observations. While this could have been overcome with follow up appropriate sampling of the physical tax records and manual collection of data, the restrictions on movement due to the Covid-19 pandemic prevented such work. The remainder of this report is organized as follows. The following section will describe the methodology for estimation of a VAT tax gap. Section three will describe the data sources used for the construction of VAT GAP model for the West Bank and the modifications that were necessary to estimate the VAT tax gap. The final section will present the results.


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  • Country

    West Bank and Gaza,

  • Region

    Middle East and North Africa,

  • Disclosure Date


  • Disclosure Status


  • Doc Name

    Palestinian Territories : Impact of Fiscal and Economic Policies - Estimation of VAT Tax Gap

  • Keywords

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Official version of document (may contain signatures, etc)


Palestinian Territories : Impact of Fiscal and Economic Policies - Estimation of VAT Tax Gap (English). Washington, D.C. : World Bank Group.