The E-Commerce Law in Palestine to Come into Effect Soon.. Protecting Consumers and Traders

Special to SadaNews - As part of the first comprehensive Palestinian law regulating e-commerce, the Ministry of National Economy announced the imminent publication of the E-Commerce Law in the "Official Gazette", after President Mahmoud Abbas recently ratified it. This law comes in response to the rapid digital transformations witnessed in Palestine, especially after the COVID-19 pandemic, which led to an unprecedented growth in e-commerce and the emergence of legal and economic challenges that require precise regulation of this vital sector.

Despite the presidential approval, Rashad Yusuf Shawar, the policies and planning official at the Ministry of Economy, indicated to "SadaNews" that the law still needs a detailed system that specifies the required procedures, primarily the formal registration mechanisms for e-commerce, reflecting the importance of the next phase in completing the regulatory framework for this legislation.

The new law aims to organize the e-commerce environment in a manner that ensures the protection of consumer rights, achieves fairness among traders, and controls the market outside the formal framework, without imposing a burden on innovation or digital growth. It is also considered an important step towards integrating the Palestinian economy into the global digital system by establishing an electronic platform for business registration, providing incentives, and promoting local products both nationally and internationally.

Expectations for the law to be applied at the beginning of next year

Shawar explained in a statement to "SadaNews" that the law will become effective three months after its publication, expecting its gradual implementation to start in January or February of next year, that is, after four to five months.

He noted that despite its ratification, the law still needs a detailed system to define the required procedures, such as the official registration mechanisms for e-commerce.

Shawar clarified that the Ministry of National Economy, in cooperation with the Ministry of Communications and Digital Economy, has been working on drafting the law since 2021, following the COVID-19 pandemic, due to the growth of e-commerce and the increase in complaints received by the ministry from both consumers and traders. Some consumers mentioned that the goods they received did not match the declared specifications, or faced problems with returns, or that the products were hazardous. In contrast, several traders expressed their dissatisfaction with the spread of e-commerce without clear obligations for those conducting it, while they are burdened with operational and tax commitments.

Shawar affirmed that the law, which consists of 28 legal articles, aims to preserve the rights of consumers on one hand, traders on the other, and the state on the third.

Will the law impose taxes on e-commerce participants?

Regarding the imposition of taxes, Shawar indicated that the law does not contain explicit provisions on this subject, noting that other laws such as the Value Added Tax Law and the Income Tax Law address these issues.

He added that what applies to traditional commerce is supposed to apply to e-commerce, confirming that the main goal of the law is to protect consumer rights and ensure fairness among traders, and not to restrict e-commerce, but rather to organize it.

He pointed out that the law requires e-commerce participants to register through a digital platform to control operations outside the official market, while granting a grace period for informal participants to rectify their status, with the possibility of pursuing non-compliant individuals legally.

He clarified that the platform allows companies registered with the Ministry of Economy to complete electronic registration processes if they wish, and it opens the door for participants via social media to officially register their businesses.

He added that the electronic platform will also provide training and qualification opportunities, in addition to offering incentives, such as encouraging its use in promoting national products within Palestine and abroad.

No accurate official estimates for the size of e-commerce in Palestine

Regarding the size of e-commerce in Palestine, Shawar affirmed that there are no accurate official estimates in this regard. As for imposing taxes on major companies like "Facebook" and others, which earn millions of dollars from the Palestinian market, he clarified that the law does not address this topic, while the Ministry of Communications and Digital Economy is working on drafting a specific law for that.

A study issued by the Palestinian Economic Policy Research Institute "MAS" indicated that the global e-commerce volume reached $25.6 trillion in 2018, equivalent to 30% of the global GDP, according to estimates by the United Nations Conference on Trade and Development (UNCTAD). This boom has created significant challenges for traditional tax systems that rely on traceable tangible goods trade and posed dual challenges for governments in most countries.

The study pointed out that these challenges are manifested in maintaining government tax revenues on one hand and not hindering the growth of the online market and development linked to information technology and the digital economy on the other hand, calling for the establishment of tax policies specific to e-commerce that achieve a balance between financial and economic goals, which is considered a core issue for both developed and developing countries.

The study also indicated the expansion of e-commerce in Palestine over recent years, which is reflected in the significant growth in the number of postal parcels received from abroad via Palestinian mail, which exceeded 900,000 postal items during 2019, an increase of 44% from 2018. Data from the 2019 Information and Communications Technology Survey in Palestine, issued by the Palestinian Central Bureau of Statistics, confirmed that 8.1% of individuals (aged 18 and above) had purchased goods or services online, while UNCTAD data indicated that the percentage of online shoppers (aged 15 and above) in Palestine reached 8% of the total internet users in 2017, and 4% of the total population.

E-commerce in Palestine has witnessed a notable boom during the COVID-19 pandemic, due to the state of emergency and government measures that restricted movement between regions, which pushed an increasing number of consumers to purchase their needs through local and global e-shopping websites, whose numbers increased significantly during that period.