And Palestine rejects 100% of Jewish building permit requests (and calls for ethnic cleansing of all existing Jewish residents).
As
toomuchtime_ already pointed out the difference is citizenship, not ethnicity. Denying building permit requests, as a matter of
law, to Arab Israeli citizens in Area C would represent an inequality which violates humanitarian law and ethics.
But denying building permits to citizens of another state within territory under your legal control which is to be negotiated in a permanent peace treaty, is a whole different perspective.
And if Israel applied Israeli citizenship and Israeli law to Arabs living in Area C, by definition, Israel would be annexing that territory and those Palestinian villages would become Israeli villages.
The question is what to do in Area C until a peace treaty is negotiated between the relevant parties. Should both Israel and Palestine be allowed to build there with impunity? Should neither be allowed to build there? If individual Palestinians and individual Israelis choose to claim a chunk of property and build an outpost there, what should be done about it? If the EU or Arab states decide to build outposts for Israelis or for Palestinians, what should be done about it? Should there be a master plan where natural growth is permitted, with building permits as necessary, but no new outposts or villages should be created?
These are FAR more complicated questions than this simple reduction of "Arabs aren't being treated fairly" suggests. And those with an interest in honest discussion, rather than just painting Israel as evil would be willing and able to address these complexities.