derived " income shall be made in the subcommittee established under paragraph 9.

5. In the event of disagreement regarding the implementation of this paragraph when the Palestinian Authority considers that a business or service should be taxed under this subparagraph, it may refer the matter to the above mentioned subcommittee.
   
   

1. For the purpose of this Annex, and for the purpose of the application of Appendix B to this Annex -
   
   
1. A corporation will be regarded as either a Palestinian or an Israeli if the majority of its shares which grant rights to distribution of profits are held by Palestinians or by Israelis, respectively.
   
   
2. For the purpose of subparagraph a. above, shares held by foreigners will be considered as shares held by Palestinians, except with regard to corporations operating within the settlements and military locations.
   
   

2. Income accruing to a partnership or derived by it will be attributed to its partners in accordance with their respective rights to profits and taxed in accordance with the provisions of this Annex.
   
   
3. With regard to corporations in which Israelis and Palestinians hold shares granting equal rights to distribution of profits, corporation tax will be levied equally on each shareholder by the relevant tax authority, in accordance with the principles of this Annex.
   
   

4. In the case of income accrued or derived by a foreigner, outside the settlements and the military locations, income tax will be levied and collected by the Palestinian Authority.
   
   

1. When an Israeli, including the military government and its Civil Administration, remits payment to a Palestinian and the payment is income taxable by the Palestinian Authority, the Israeli will deduct tax at source in accordance with the rules of the Palestinian tax code regarding the deduction at source by Palestinian payers and transfer it to the Civil Administration.
   
   
2. All activity relating to the assessment and collection of such deductions will be carried out by the Civil Administration or by Israel.
   
   
3. The Civil Administration will transfer such deductions to the Palestinian Authority in a manner to be agreed upon.
   
   
4. Procedures for implementation of the above mentioned arrangement for deduction at source will be determined by the Joint Economic Committee established under the Gaza - Jericho Agreement.
   
   
5. Pending the determination of the above mentioned procedures:
   
   
1. the present system of tax deduction at source from wages and salaries will continue to apply with regard to payments to Palestinian employees; and

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