Message from the Tax Reform Committee Chair and Bureau of Revenue & Taxation
Director, Elway Ikeda
Introducing tax reform and modernizing our tax system helps us build a prosperous Palau for today and protects our children’s economic future. The BRT is entrusted by the Palauan government to administer the tax system and ensure all Palauans meet their tax obligations.
I would like to thank you for working with us to prepare for our new tax system, and its ongoing implementation. This important work funds public services and infrastructure such as hospitals, roads, and schools. Your positive behavior makes a difference to our community.
This is a pivotal time for Palau and it’s important everybody pays their fair share. We all pay what we are required to because it is the right thing to do, and I encourage your willing participation to maximize the benefits for our community.
We’ll support you by providing certainty of what your obligations are and how to meet them, when they are due or overdue, and what engagement to expect from us.
The December 31, 2022, compulsory registration date has now passed. If you were required to register for PGST on December 31, 2022 and didn’t, contact us now for assistance. If you reach the compulsory registration threshold, or wish to voluntarily register, you may register now .
The first PGST return you need to file and pay is the January 2023 PGST period (January 1 to January 31, 2023), which is due by March 2, 2023.
Record keeping is essential to help you accurately prepare and file your return. Records are also important to explain your business profits tax transactions as well as keeping track of your business performance generally.
As a PGST registered business, in addition to the normal records you need to keep for your business, make sure you keep the following transaction related records (in chronological order):
- PGST invoices, credit notes, and debit notes received (expenses)
- PGST invoices, credit notes, and debit notes given (sales)
- any recipient-created PGST invoices in respect of supplies of imported services received
- records of imports of and exports of goods (if provide exempt supplies).
Get more record keeping tips.
We look forward to continuing to work with you, the community, for a successful first filing period. We are here to help, so contact us early if you need assistance.
Palau Goods and Services Tax (or PGST) was introduced on January 1 2023. It is a broad-based tax of 10%, applied to most goods and services and other items sold or consumed in Palau.
Some things don’t have PGST included, these are called Exempt supplies.
Businesses registered for PGST charge PGST on their sales and collect on behalf of the government. The government then distributes the PGST revenue collected to pay for public services and infrastructure such as hospitals, roads, and schools.
PGST is charged at each step of the supply chain with the end consumer bearing the cost (user pays). This ensures profits from the tourism and other industries are taxed within Palau, creating a fairer tax system, where tax revenue generated is kept in Palau, to benefit Palauans.
Business Profits Tax (BPT) was introduced on January 1, 2023 and automatically applies to businesses registered for PGST. It is calculated at 12% tax on net income (gross revenue less allowable deductions), the same rate as the highest rate of tax on wages and salary.
BPT replaces Gross Revenue Tax (GRT) and differs by imposing tax on profits, rather than on entire turnover.
Planning ahead for tax is important for businesses to keeping a healthy cashflow. BPT helps do this through quarterly payments (installments), so when the annual BPT is filed there is little or no remaining tax to pay.
Gross revenue tax (GRT) applies to any non-Palau Goods and Services Tax (PGST) registered person (individual or entity) with an annual gross income more than $50,000. GRT is calculated at 4% of the person’s gross revenue (turnover).
From January 1 2023, Business Profit Tax (BPT) will replace GRT for businesses registered for PGST.
Businesses with an annual gross income less than $50,000 will not be subject to GRT, however, they will pay a small additional business license fee to ensure tax compliance.
Key Tax Reform Topics
Palau Goods & Services Tax (PGST)
Palau Goods and Services Tax (PGST) registration threshold – calculating your taxable supplies
Palau Goods and Services Tax (PGST) types of supplies
Palau Goods and Services Tax (PGST): what you need to do after registering
Prevention of Price Exploitation – PGST
PGST Input Tax Credit, Tax Return and Record Keeping
Gross Revenue Tax (GRT)
Wages & Salary Tax
Hotel Room & Vessel Cabin Occupancy Tax
Land Transfer Proceeds Fee
Social Assistance Payments
Palau National Code Title 40
MOF Tax Reform Webinar March 29, 2022
Palau Goods and Services Tax Regulations (as of 2/7/2023)
Business Profits Tax Regulations (as of 2/7/2023)
Change in Method of Tax Accounting: Treatment of Amounts Derived
PGST Registry (as of 10/11/2023)
BRT Business License Registry (9/6/2023)
Proposed ROP BRT Taxpayers Charter
Tax Circular – Administrative Guidance on the Application, Treatment and Assessment of ABL