Israel Finance Minister Yuval Steinitz met with Palestinian prime minister Salam Fayyad on Tuesday to discuss economic issues, a statement said.
"The meeting focused on the arrangements concerning the transfer of goods and the taxes between Israel and the Palestinian Authority," the statement from Israeli Prime Minister Benjamin Netanyahu's office said.
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"We hope these arrangements will help advance our relations with the Palestinians in other areas," the statement added.
Israeli public radio said the arrangements would come into force at the start of 2013 and are aimed at developing trade relations and combatting tax evasion and smuggling.
Under the 1994 Paris Accords, Israel transfers Palestinian tax and tariff funds to the Palestinians.
The funds total about 700 million to one billion euros ($862 million to $1.2 billion) a year, representing two thirds of the Palestinian Authority's annual budget.