Exploring and Analyzing the Relationship between Taxes

Policymakers and Financial Investments Owners:

Evidence from State of Palestine

Shadi Emad. A. Alhaleh

, Puji Handayati

, Bambang Sugeng

Universitas Negeri Malang

Keywords: Tax System, Tax Policymakers, Financial Investments owners, and Individuals and Corporate Companies.

Abstract: This study is about exploring and analyzing the relationship between taxes policymakers and financial

investments owners. It aimed at achieving and spreading tax policies, procedures, structures and regulations

among financial investments that are owned by individuals and corporate companies. It provided insights

into the problem and helped developing ideas on improving a good relationship between tax policies and

financial investment in order to extend investment size and maximize profits, and improve the quality of tax

policies as well. The study was conducted in State of Palestine. This study has used Qualitative research

with type of case study. Data were collected through documentation, observation and online interviews.

Qualitative data were subjected to content analysis. The findings showed that the relationship between tax

policies and financial investments is acceptable. But, those financial investments that are owned by

individuals, their awareness and understanding of tax policies is limited, not like corporate companies.

Therefore, individuals would contribute to the improvement and the development of country’s tax policies if

those policies are imposed equally on all parties. Many elements were associated with exploring and

analyzing the relationship between taxes policies and financial investment in Palestine namely tax policies

structure and hierarchy, tax rate, tax laws systems and procedures, tax incentives, individual’s perception

towards government ability to utilize tax collection for social welfare, and the quality and capacity of tax

administration. The study recommended to work on improving the coordination between taxes policies and

financial investments in order to contribute to the improvement and development of the quality of tax

policies and the quality of financial investments as well. Through, a) Increasing the attention to the internal

control system in tax services and policies departments more than is applicable, b) Issuing a working

manual that includes the detailed procedures of each control process of tax policy, and c) Generalizing the

rules of implementation of tax policies.

1 INTRODUCTION

The political, economic and social development of

any country depends on the amount of revenue

generated for the provision of infrastructure in that

given country. However one means of generating the

amount of revenue for providing the needed

infrastructure is through a well structure tax system.

Azubike (2009) is of the view that tax is a major

player in every society of the world. The tax system

is an opportunity for government to collect

additional revenue needed in discharging its pressing

obligations.

A tax system offers itself as one of the most

effective means of mobilizing a nation’s internal

resources and if lends itself to creating an

environment conducive to the promotion of

economic growth. Nzontta (2007) on the other hand,

argues that taxes constitute key sources of revenue

to the federation account shared by the federal, state

and local governments. Appah, et al., (2004). Tax is

a compulsory levy imposed on a subject or upon his

property by the government to provide security,

social amenities and create conditions for the

economic well-being of the society also Anyanwu

(1996) and Anyanfo (1997) stated that tax are

imposed to regulate the production of certain goods

and services, protection of infant industries, control

business and curb inflation, reduce income

inequalities etc. On the other hand, Tosuu and

Abizadeh (2005) acknowledge that taxes are used as

Alhaleh, S., Handayati, P. and Sugeng, B.

Exploring and Analyzing the Relationship between Taxes Policymakers and Financial Investment Owners: Evidence from State of Palestine.

DOI: 10.5220/0008786402670275

In Proceedings of the 2nd International Research Conference on Economics and Business (IRCEB 2018), pages 267-275

ISBN: 978-989-758-428-2

267

proxy for fiscal policy. They outlined five possible

mechanisms by which taxes can affect economic

growth. First, taxes can inhibit investment rate

through such taxes as corporate and personal

income, capital gain taxes. Second, taxes can slow

down growth in labor supply by disposing labor

leisure choice in favor of leisure. Third, tax policy

can affect on research and development expenditure.

Fourth, taxes can lead to a flow of resources to other

sectors that may have lower productivity. Finally,

high taxes on labor supply can distort the efficient

use of human capital high tax burdens even though

they have high social productivity.

Moreover, the improvement of tax system (Tax

Policies) is usually depending on the quality of the

existing investments and their size in the state.

Financial investments are considered as the main

key to support the needs and demands of

government, and also it is an important tool that

used to measure the economic conditions and the

growth rates in the state. In this context, the study

has focused on creating a good relationship between

tax policymakers and financial investments owners.

Therefore, the relationship in this context means the

ongoing process of identifying, establishing,

maintaining, and enhancing successful relations with

different investments and other parties. So that the

purposes of all parties (Tax systems and

investments) involved are met, and this is done by a

mutual giving and fulfillment of promises. Also, this

relationship is considered as a social relationship in

order to accomplish the purpose of meeting the

interests of both parties, and ensure that mutual

needs are met during social interactions between

these parties. Furthermore, this relationship based on

communication between Tax policies setters and

investors (the owners of financial investments), in

which this communication is considered as any act

by which one party gives to or receives from another

party information about the mutual needs, desires,

perception, knowledge or affective states.

Communication is defined as the process of passing

important information and understanding from one

party to another, it is essentially a bridge of meaning

between taxes and investments.

Tax is a major sources of government revenue all

over the world. Government use tax proceeds to

render their traditional functions, such as provisions

of public goods, maintenance of law and order,

defense against external aggression, regulation of

trade and business to ensure social and economic

maintenance. Musgrave and Musgrave (2004) stated

that economic effects of tax include micro effects on

the distribution of income and efficiency of

resources use as well as macro effect on the level of

capacity output, employment, prices and growth.

Furthermore, to establish the role of Palestinian

taxes policies and meet the purpose of its existence,

the country should collaborate with investors in

order to achieve the interests of state’s economy, and

achieve the internal, and external stability (Jihad,

Ghasawna.1999). In addition to reinforcing the main

concept of financial investment and its role in the

state, the policymakers should confirm the definition

of tax fairness which is the idea most people

gravitate towards when thinking about good tax

principles, but the emphasis placed on this issue is

often so great it appears fairness is the only tax

concept that matters. Of all the principles of good

tax policy, fairness is the most challenging to put in

place since it means different things to different

people. Therefore, if there is tax fairness in the

issued policies, then this will lead to upgrade the

quality of existing investments, and will

dramatically improve tax system to be such a tool

that all different financial investments would depend

on.

1.1 Statement of The Problems

In developing countries, the government has to

control the development and the growth of economy

or some economies through setting policies,

procedures, and legal instructions. In addition,

government sometimes manage and coordinate some

investments because private initiative and capital are

limited. Tax policy is considered as such an

important tool that is used by government, and it

means the choice by a government as to what taxes

to levy, in what amounts and on whom, and it could

be the use of government spending and revenue

collection to influence economy. Therefore, tax

policy is usually used to promote economic growth

and stability, and promote social policy programs

with economic effects. Taxation is concerned with

clarifying the main regulations, laws and policies

that belong to the followed and the implemented tax

system, and it exists in public economics.

Governments at all levels (national, regional and

local) need to raise revenue from a variety of sources

to finance public-sector expenditures. In economics,

taxes fall on whomever pays the burden of the tax,

whether this is the entity being taxed, like a

business, or the end consumers of the business’s

good.

According to the classical economist the only

objective of taxation was to raise government

revenue. But with the change in circumstances and

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268

ideologies, the aim of taxes has also been changed.

These days apart from the objective of raising the

public revenue, taxes level affect consumption,

production and distribution with a view to ensuring

the social welfare through the economic

development of a country, tax can be used as an

important tool in the following manner: optimum

allocation of available resources, raising government

revenue, encouraging savings and investment,

acceleration of economic growth, price stability,

control mechanism etc. the one and major problem

to be address in this work “is the poor tax policies

discipline in the allocation of resources and the

operation of an ineffective tax regime in Palestine”.

The work therefore intends to examine whether

economic growth is enough a viable tax in Palestine.

1.2 Objective of The Study

This study generally seeks to “identify or analyze

the relationship between tax policymakers and

financial investment owners” in which effective tax

policies has brought about economic growth and

financial investments in Palestine. While the specific

objectives are as follows:

1. To explore the relationship between tax

policymakers and financial investment owners in

Palestine.

2. To analyze or discover if there is any

contributions of tax policies to real financial

investments in Palestine.

3. To determine whether the relationship between

policymakers and investments owners is

acceptable or not in Palestine.

1.3 Study Focus

This paper has been made to focus on:

Understanding the relationship between tax

policies and financial investments. Where the

owners of those investments will provide a sense of

tax policy and will actually promote the

implementation of tax policies. Tax policies setters

will also provide a sense of tax system as a result of

establishing a good relationship with the owners of

financial investments. Whereas, financial

investments could lead to promote strong economic

development and stability, low inflation and layoffs,

low unemployment and wide range of opportunities,

and strong government budget revenues.

Exploring and analyzing the core content of each

concept through explaining the main components of

tax policies (e.g. tax laws, legal procedures, policies,

regulations, and the hierarchy of tax policies), and

the components of financial investment as well (e.g.

size, activities, type and financial position).

1.4 Significance of The Study

The study is reasonable on the basis that it would

serve as good grounds for theory development which

would give insight that would be useful in relation to

other interventions for tax policies in Palestine and

to add to knowledge about the relationship between

Tax Policies and Financial Investment. This would

be a useful resource which would be beneficial to

individual tax administrators, the government and

the academia. Additionally, this study is justified on

the grounds that it provides recommendation for

further studies on tax issues and investment in

Palestine. The study gives theoretically knowledge

to the investors and other tax administrative officers

on applications of the tax policies.

2 THEORETICAL FRAMEWORK

AND LITERATURE REVIEW

2.1 Stakeholder Theory

Stakeholder theory means a collection of policies

and practices relating to The stakeholders, values,

compliance with legal requirements and the

environmental community awards, as well as the

commitment of business to contribute to the

sustainable development. Stakeholder theory begins

with the assumption that the value (value) explicitly

and no doubt a part of business activities (Freeman

et al., 2002 in Kusumadilaga, 2010). Furthermore,

investment has a direct relationship with

stakeholders, and investment concepts cannot be

separated from the main process of stakeholders

operations, activities and their financial transactions.

In addition, investment is considered as the main

company’s strategy to satisfy stakeholders.

Therefore, if investment policy is done well, the

performance of the company will increase. This is

because the stakeholders have confidence in the

company that they invest in. thus, this would make

investors to look after the company, and its social

and environmental problems and conditions that

exist. Thereby, stakeholders will provide full support

for any action taken during the company did not

violate the law. Stakeholder’s theory is the theory

that puts emphasis on the role of stakeholders,

stressing the fact that a ﬁrm cannot function

independently from its surroundings (Bearle and

Exploring and Analyzing the Relationship between Taxes Policymakers and Financial Investment Owners: Evidence from State of Palestine

269

Meanse, 2002). Eventually, investment tools have

assumed that the only transaction where the ﬁrm

oﬀers something of value – typically social proﬁts or

public service – presupposes the approval and

support by key individuals and/or social-political

interest groups (Murray, Vogel, 2007).

2.2 Agency Theory

Agency theory is entirely connected to the

description of the nature of conflict between the

interests of principals and agents. Jensen’s and

Meckling’s (1976) model on agency and ownership

structure holds a central role in the corporate

literature, and it explains the main relationship

between two parties. On one hand, the principal, he

acts as the one who will run the ownership, and the

related businesses. On the other hand, the agent, he

acts as the one who will manage the transactions and

interests with the first party. This theory was chosen

to determine the relationship between tax policies

and financial investment, and diagnose the

turbulences and the conflict between tax policies and

financial investment in Palestine.

However, agency theory was extended to define

the role of management for determining the basic

relations between different agents with different

goals in the organization, (Eisenhardt, 1989). The

agency theory that relates to this study is about

understanding the relationship between one parties

(called the tax policy) is engaged by another party

(called the financial investment). Both parties are

assumed or recognized to be benefits maximizer,

and motivated by financial and non-financial items.

Meanwhile, there are some problems that surround

the relationship between both parties, and it could be

uncertainty and information asymmetry. Therefore,

if the objective function of both parties is

incompatible, this could lead to make the (tax

policy) take actions which will jeopardize the

(financial investment) benefits. In addition, the

agency theory always operates under the condition

of risk and uncertainty

2.3 Taxation Theory

Taxation theory is concerned with clarifying the

main regulations, laws and policies that belong to

the followed and the implemented tax system, and it

exists in public economics. Governments at all

levels (national, regional and local) need to raise

revenue from a variety of sources to finance public-

sector expenditures. In economics, taxes fall on

whomever pays the burden of the tax, whether this is

the entity being taxed, like a business, or the end

consumers of the business’s good. In addition,

Taxation theory is being compulsory contributions

from individuals, or business entities to the

government to defray the public expenditures by the

government has some effects in the economy as well

as in the social life of the society. The effect might

be constructive to the economy or might damage the

economy. Furthermore, the fundamental purpose of

any tax system is to raise revenue for government.

Therefore, it’s important to view tax proposals first

through the lens of what makes a good public

finance system. Over years of research and

practical experience, tax policy has advocated

several concepts and principles to guide decision-

makers and inform governments as to how to best

tax their citizens. Finally, it should be noted that

“good tax policy” does not change during times of

large budget deficits or healthy surpluses. Good tax

systems can fall woefully short of creating adequate

revenue during recessions, and poor tax systems can

raise plenty of money (but they often are

unsustainable).

Adam Smith in The Wealth of Nations (1776)

wrote:

"Such things as defending the country and

maintaining the institutions of good government are

of general benefit to the public. Thus, it is

reasonable that the population as a whole should

contribute to the tax costs. It is also reasonable to

demand certain other things of a tax system – for

example, that the amounts of tax individuals pay

should bear some relationship to their abilities to

pay… Good taxes meet four major criteria. They are

(1) proportionate to incomes or abilities to pay (2)

certain rather than arbitrary (3) payable at times

and in ways convenient to the tax payers and (4)

cheap to administer and collect."

3 TAX FUNCTIONS:

According to the taxation theory. It has divided taxes

into groups in order to simplify the process of tax

policy. Therefore, this theory has explained the main

function of tax in which these functions are:

a. Is to finance the country’s expenditures. Taxes

are the main source to finance these

expenditures, and governmental budget in order

to offer the public services to the citizens.

Moreover, if tax payers are concerned with

paying taxes, then the government will be able to

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270

offer services, and meet citizen’s requirements

(sabri:1998).

b. Is to achieve the social goals: through

redistributing income equally among all

individuals, then this would lead to make

individual obey the tax regulations and rules.

Therefore, they will collaborate with tax

administrations in order to achieve the main

purposes of tax justice (Abo Nasar: 1996).

c. Is to achieve the economic goals: through

granting exemptions, and motives to the private

sectors, then this would lead to increase

productivity, and efficiency and effectiveness of

these sectors to supply the state’s economy (Abo

Nasar: 1996).

d. Is to protect the national products: through

imposing high taxes on importing products, or

reducing it or cancelling it, in order to improve

the quality of national products and to protect it

(siam:1994).

e. It is considered as tool of economic policy tools

in order to make a balance in the financial

policies, to encourage investments, and to

encourage producing national products (Abo

Nasar: 1996).

4 TAX POLICY PRINCIPLES

This paper has determined to create a positive and

acceptable relationship between tax policies and

financial investment. Therefore, if this relationship

is good, then economy growth, stability and the

quality of investment and productivity will be

improved and upgraded. Furthermore, there are six

principles must be taken into consideration in order

to establish this relationship (Keen, Michael, 2004).

1. Keep tax policies simple, easy to comply with,

and easy to collect: tax policies must be easy not

difficult in order to connect all investors towards

it. Moreover, tax policies are considered as the

main coordinator that directs, and manages all

economic activities and operations, and

especially those that are in relation with financial

investment and investors. In addition, the more

complex a tax, the greater the costs for the

government to administer it and the greater the

compliance costs for investors to determine their

liability and report it. Simplicity also breeds a

sense of fairness among investors due to greater

understanding.

2. Make tax policies transparent and visible:

investors should know that a tax exists, why the

tax is being levied, who's responsible for the tax,

and how it's calculated and paid. As a matter of

economics, when taxes are visible it allows

investors to make informed judgments about the

relationship between their tax burden and the

types and levels of government services provided

to them.

3. Encourage stability and predictability: it means

that tax policies should provide investors with

supportive tax services, information and any

other tax documents. Therefore, this could help

investors to put the right plans to manage their

investments. Thus, this would upgrade the

process of tax policy to be such an important tool

in investment.

4. Don’t distort decision-making: it means that tax

policies should be a tool that could enable

investors to make their decision as easily as

possible. It shouldn’t be a harmful tool. Thereby,

easy tax procedures would lead to enhance the

harmony and positivity with investors. Thus, this

could lead to make investors trust in tax policies

and its criteria, structures, and procedures.

5. Protect economic competitiveness: a tax system

needs to reflect the realities of competing in a

global economy. Information technologies and

other advances are reducing the significance of

"place" in the conduct of economic activity. No

state can afford to ignore this by placing

themselves at a distinct comparative disadvantage

relative to other states. Tax systems should also

be responsive to changing regulatory and

competitive circumstances.

6. When possible and appropriate, base taxes on

benefits received -- Policy makers should always

strive to enact fees or taxes that are directly

related to the costs of the benefits provided to the

people paying them. Of course, most

government services are more general in nature

and broadly beneficial to society as a whole,

which means they can’t readily be tied to

identifiable taxpayers or groups of taxpayers.

Consequently, most government services require

general taxation and the consideration of other

tax principles.

Exploring and Analyzing the Relationship between Taxes Policymakers and Financial Investment Owners: Evidence from State of Palestine

271

5 THE RELATIONSHIP

BETWEEN TAX

POLICYMAKERS AND

FINANCIAL INVESTMENT

OWNERS

Definitely, a good relationship between Tax

Policymakers and Financial investments owners

could be established by reinforcing the main

principles of social tax justice which are A) Equity.

B) Simplicity. C) Certain. D) Convenience. E)

Elasticity of Tax to changes in the tax base.

Therefore, if these principles are implemented as

effectively as possible, then this would dramatically

lead to establish positive, and strong relationship

between both of them. Thus, the possibility of

achieving the purposes of this relationship will be

strongly noticed. Generally, the one who is totally

responsible for establishing that relationship is tax

administrations, because tax administration is acting

as the financial tool of country’s budget, and it is

responsible for the whole tax activities. Therefore, to

establish a good relationship: Firstly, tax

administration must accept and respect the given

financial statements that are provided by investors

and owners of corporate investments and not to

reject it all. Secondly, tax administration must adopt

new techniques such as (innovate new tax systems,

improve tax facilities, and create flexible laws), and

other techniques that would increase the confidence

of those investors towards tax administration.

Thirdly, investors must follow and obey the current

tax procedures, and they should be committed to the

instructions of tax policies. Thus, this relationship

will positively achieve the interests of taxes and

investors.

Furthermore, a good relationship could be

established. But, it should depend on elements such

as: A) Equal treatment should be made among all

investors without any biases. B) Improve

communication skills of tax officials towards the

owners of financial investments, and upgrade their

knowledge about Tax systems and policies. C) Tax

policies setters should offer the same tax

information, and tax services to all those who want

to invest in the state, and it should not be offered

only to big corporations and foreign investments.

And D) creating agreements between Tax policy

setters and investors in order to know the main

requirements and needs of both of them. Therefore,

this would lead to meet the interests of both of them.

6 STUDY METHODOLOGY

In this study, the researcher used qualitative

research. The type of this research is case study

which means the specification in an event, including

individuals, a group of culturally or a portrait life

(Cresswell, 1998) mentioned several characteristics

of a case study, which are: (1) to identify a case for a

study, (2) the case is a system that bound by the time

and place, (3) case studies uses various sources of

information in the collection the data to give a

picture in details and deeply about response of an

event, and (4) using the case study. The qualitative

approaches were used to provide descriptive forms

which involved conducting interviews, observation

and questionnaires with open ended questions.

Moreover, as proposed by Creswell (2009)

qualitative research is primarily exploratory

research. It is used to gain an understanding of

underlying reasons, opinions, and motivations. It

provides insights into the problem or helps to

develop ideas or hypotheses for potential

quantitative research.

Basically, a research with the qualitative

approach aims to know about something in depth. So

in this research, the researcher used qualitative

research to explore and analyze the relationship

between taxes policies and financial investments and

all related aspect to export research focus.

Understanding and interpreting the views and events

on the subject of research in order to explore the

information needed in the study. In addition, this

study has been chosen in order to provide necessary

documents, details, ideas and information on the

relationship between taxes policies and financial

investments. Furthermore, the researcher will

recognize how to obtain useful data to serve the

research.

6.1 Methodology Justifications:

This methodology was chosen in order to provide

new strategies, insights into or techniques that could

be used to determine the role of Palestinian tax

policies in achieving the desirable interests of

financial investments in the State, eliminating or

minimizing the effects of unacceptable tax

procedures, and identifying the nature of tax policy

and financial investments. Therefore, this will lead

to enhance the development of the economy and the

country's growth. Moreover, this methodology was

used to analyze the relationship between tax policies

and financial investments. And identify the strengths

and weaknesses of this relationship. In addition, the

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272

main justification of this study is to conduct research

in understanding Palestinian tax policy, obtain

reasonable data in deep responses, and achieve

meaningful results with a small sample set. Finally,

this methodology was chosen, because of its ability

to provide meaningful knowledge to those who

interest in. In addition, its availability to provide

information on the different aspects of tax.

7 STUDY FINDINGS

1. It was found that there was acceptable

relationship between tax policymakers and

financial investment owners. In addition, it was

noticed that foreign investments have lots of tax

facilities rather than local investments.

Therefore, the tax relations with local financial

investments are limited. Thus, this could lead to

harm the state’s economy on the long run.

2. It was found that there was reasons for non-

achieving the interests of both of tax

policymakers and investors in which these

reasons are: low collaboration with some local

investments, and irresponsibility is at first; lack

of adequate tax services, information, and other

facilities provided is at second; poor relationship

of some local financial investment owners with

tax policymakers is at third; unclear tax

procedures, and policies is at fourth; and low

investment exemptions is at fifth.

3. It was found that there was lack of tax awareness

of owners (financial investments) of the

importance of current tax system (policies,

structures, procedures, and the updated tax

regulations). Therefore, tax policymakers should

provide continuous journals and conferences on

their policies. Thus, this will lead to increase the

awareness of owners, and improve their relations

with tax policymakers as well.

4. It was found that there was lack of the

Establishment of the social security fund to

facilitate the enforcement of labor law and

legislations, taking into account the amendments

proposed by financial investments owners in

Palestine.

5. It was found that there was cut back on the local

financial investments. Therefore, intensive

efforts should be exerted to enhance awareness

for promoting the advantages and traits of the

local investments.

6. It was found that there was lack of transparency

in enforcing the new tax policies and laws, and

low tax facilities to supply new local investors.

8 CONCLUSIONS

During this study, what has been noticed is that local

and foreign financial investments have contributed

to the improvement and the development of tax

policy (Tax System) of the government. Whereas,

this has enabled the government to offer public

services to the citizens and enabled it to encourage

new investors or startups businesses to invest in the

state. Each financial investment has its own vision,

mission, culture, and philosophy. In Palestine,

financial investments are the main source of

governmental tax revenues. Thereby, tax

policymakers have set new tax procedures and

techniques in order to facilitate investors and

owners, and improve the quality of their

investments. In addition, this study has figured out

that financial investments are considered as the key

player to offer public services through supporting

the governmental budget revenues, encouraging

foreign investment in order to enter hard currency to

the country, and decreasing the high levels of

unemployment and inflation in order to decline the

governmental expenditures.

Furthermore, the results of analysis have shown

that the relationship between tax setters and foreign

investments is stronger than local ones. Therefore,

that has led to decrease the number of local investors

in the state. Thus, this could harmfully affect the

local economy. In addition, many factors such as

financial inability, poor economic conditions, high

fluctuation and economic crisis, political instability,

and liquidity deficiencies and many more could

affect negatively the state’s economy if government

and tax policymakers didn’t pay attention to the

importance of local financial investments. In

evaluating tax policy, it is important to understand

the interactive effects with the implications for

financial investments and business decision-making.

This is especially true for redistributive goals, which

economists recognize are best left to tax system.

Finally, this paper has demonstrated—on

exploring a relationship between state’s policies and

state’s economy. Whereas, this study has urged to

set new tax policies that suit all different types of

investments, and to upgrade its quality, efficiency,

and effectiveness to be more competitive with other

economies. In addition, this study has reached to the

conclusion that the Palestinian economy is a little

strong. But, not strong enough, if it is compared to

the economies of other countries and even other

developing countries, because of lack of financial

investments and poor redistribution of resources. In

addition, the practices of the occupation and its

Exploring and Analyzing the Relationship between Taxes Policymakers and Financial Investment Owners: Evidence from State of Palestine

273

control over the crossings and borders linking

Palestine to the outside world has led to restrict the

state’s development, and limit the encouragement of

investment in the state.

9 STUDY RECOMMENDATIONS

Recommendation Base on the general findings of

the study the following recommendations are

however made:

1. Government through the monetary authority

should implement taxation laws that stimulate

the aggregate level of investment in Palestine.

2. The government should implement tax policies,

procedures and other regulations fairly among

local and foreign investments in order to achieve

economic development and growth objectives.

3. Government should use the earned tax revenues

to provide infrastructural amenities as this will

encourage and attract new investors whether they

are locals or foreigners to invest in Palestine.

Therefore, this would dramatically lead to

increase the capacity of their financial

investments.

4. Rationalize and unify policies of public

expenditure as well as ensure commitment of all

governmental institutions to encourage and

protect the local financial investments. In this

regard, serious efforts should aim to stop waste

of funds and excessive spending on luxurious

cars as well as on furnishing of ministries and

other governmental institutions with imported

exorbitant furniture.

5. Pay serious attention to establishing and

allocating funds for research and development

that are needed to keep the both of local and

foreign investments informed of the latest tax

policies, laws, regulations, and procedures, and

that’s in order to enhance a well-accepted

relationship.

6. Support and offer tax facilities and exemptions

that encourage foreign and local investments to

improve the state’s economy. In addition, adopt

an effective mechanism that ensures the updating

of new financial investments registration

information whenever changes occur in the status

of the entity particularly in changes in contacts

and locations.

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