2. until 31 December, 1994, tax will be deducted at source at the rate of 5% from other payments to Palestinians referred to in subparagraph a. above, subject to existing certificates concerning the reduction of deduction at source which shall continue to remain in force notwithstanding their initial date of expiration.
   
   

As of January 1, 1995, deduction at source from such payments will be effected only on the basis of the procedures to be agreed upon.

1. When a Palestinian remits payment to an Israeli, there will be no tax deduction at source.
   
   
2. The Palestinian Authority may transfer to the Civil Administration information regarding such payments where it considers that the income of the Israeli falls under paragraph 3 ( b ) above, in order to assist the Civil Administration in levying tax on such income.
   
   
3. The Civil Administration will transfer to the Palestinian Authority, on a bimonthly basis, the sums collected from Israelis as advance payments in respect of taxes to be collected by the Civil Administration under paragraph 3 ( b ) above.
   
   

Each tax year there will be a settling of accounts between the Civil Administration and the Palestinian Authority with regard to the final tax collected according to paragraph 3 ( b ), taking into account the aforementioned advance payments and any necessary resultant tax refunds.

4. Foreigners who are subject to income tax levied by the Palestinian Authority will deduct tax at source in the same manner as Palestinians.
   
   

5. Until the Interim Agreement enters into force, Israel will transfer to the Palestinian Authority a sum equal to 75% of the income taxes collected by Israel from Palestinians employed in the settlements and military locations and in Israel.
   
   
6. The two sides will establish a joint committee composed of representatives of both tax authorities. This committee will discuss cases where one side wishes to tax businesses or services subject to the tax authority of the other side as well as cases where it is not clear by which side tax should be levied and all cases concerning double taxation.
   
   
7. Tax enforcement by the Palestinian Authority shall be in accordance with the principles set out in attached Appendix B.
   

Appendix A

Laws, Regulations and Military Orders in the Sphere of Direct Taxation

1. Income Tax Law, No.25, 1964, except article 74 ( 1 ), and as follows (article numbers relate to Hebrew version);

28 ( a ) ( 4 ) - ( 5 ) - will apply to civil examinations ( not to criminal investigations ); 29b, 34a ( a ) ( 2 ), 34a ( d ), 49(3), 54 ( 3 ), 57, 63 ( c ) - ( d ), 64, 66 ( 4 ) - will be subject to the principles regarding tax enforcement; 44 ( 1 ) - will not apply to the military government, the Civil Administration and their employees; 21, 62, 63 ( c ), Chapter 16 - will be subject to the principles regarding the tax enforcement;

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