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Palestine to raise tax on Chinese imports

By Fang Yunyu (Global Times)

08:23, March 14, 2013

Palestine will raise the tax on products imported from China starting from April 15, the Palestinian authorities told the Global Times Wednesday.

"With the aim of protecting local products as well as to institute principles of fair competition and in order to collect real revenues, the Cabinet has decided to introduce an additional tax of 35 percent on products imported from China," said a statement sent by the Palestine Cabinet to the Global Times Wednesday.

Currently, the Palestinian tax rate on Chinese imports is no more than 12 percent.

Ahmad A.M. Ramadan, ambassador of the State of Palestine in China, was not available to comment Wednesday.

"The government is taking these steps to encourage Palestinian goods locally and to help them in being exported to other countries," Palestinian Economy Minister Jawad Naji was quoted as saying last week by the local Ma'an News Agency when talking about new import taxes on foreign goods.

Jason Ma, a sales manager at Yiwu Zhifu E-Business Firm, an accessory firm in East China's Zhejiang Province that exports goods to Palestine, told the Global Times that such a big jump in taxation will hurt his business massively.

"The tax increase is just too big!" Ma said Wednesday, without revealing details of his exports to Palestine.

According to the Palestinian Central Bureau of Statistics, the country has had a chronic trade deficit during the last decade.

In December last year, it recorded a trade deficit of $304.3 million, up from $245.8 million in November.

"Because of the country's inability to access key resources, such as petroleum, it has seen a trade deficit with imports of Chinese products, which are cheap and of good quality," Li Weijian, director of the Institute for Foreign Policy Studies of the Shanghai Institutes for International Studies, told the Global Times Wednesday.

"The decision to increase the import taxes is more like a government gesture showing that Palestine is not happy with the big influx of Chinese goods in recent years," Li said, noting that the taxes may also be a way of negotiating with China for preferential trade policies or aid.

According to statistics from the Xinhua News Agency Wednesday, China exports goods worth $320 million to Palestine annually, mostly clothing, furniture and electronics.

As well as the trade deficit concern, Naji told Xinhua that the tax increase was also intended to create a "fair" market for competition between Chinese and Palestinian goods, noting that some Chinese exporters have been intentionally under-reporting goods' value, as a way to escape taxation.

Several Chinese exporters refused to comment on the issue of avoiding taxes when contacted by the Global Times, but said that their Palestinian partners usually handle the import process.

An exporter in Zhejiang told the Global Times on condition of anonymity that due to the unstable political conditions in Palestine, Chinese exporters do not see it as a particularly attractive market.

"We mainly do business with Europe, North America and other Asian countries and regions. So the tax increase will not have a big impact for us," he said.

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