Next steps after registering for PGST
Once you are registered for PGST, there are steps you need to take to be PGST ready from January 1, 2023.
Consider what you need to do now to be ready to meet PGST requirements as some tasks require preparation.
Below is a checklist on what to do to be PGST ready:
- Registration certificate – on display in a prominent place
- PGST signage – on display to let your customers know your prices are PGST inclusive
- Pricing – calculated and displayed prices inclusive of PGST (and exclusive of other irrelevant taxes)
- PGST invoices – ready to provide a valid PGST invoice to your customers
- Stock take – complete a stock take on December 31 so you can:
- claim the transitional PGST input credits for inventory on hand that you imported after September 1, 2022, and
- correctly complete your Business Profits Tax return
- Keep accurate records
PGST registration certificate
From January 1, 2023, your PGST registration certificate must be clearly visible in your business premises. This includes mobile premises.
After you have correctly completed and filed your PGST registration form with us, we will send you your registration certificate within 5 working days. We will send this to you by email or post mail delivery, depending on the delivery preference you provided when registering.
PGST registration comes into effect on January 1, 2023 for compulsory registrants and from the date specified on the registration certificate for voluntary registrants. Voluntary registrants cannot charge PGST on sales you make (taxable supplies), or claim PGST input tax credits on purchases, until you receive your PGST registration certificate.
PGST-registered businesses will also be listed on the BRT website.
PGST signage
From January 1, 2023, you must display a sign within your business premises to say that supplies are made inclusive of PGST, or show clearly on your invoices that taxable supplies include PGST.
Example: A sign in a prominent place in your store stating that: “Prices displayed in this store are inclusive of PGST” would be satisfactory.
PGST Pricing
From January 1, 2023, if you are registered for PGST – or required to be – you will need to include PGST in the price of goods and services you sell in Palau. You pay PGST on the taxable sales you make when you file your PGST return.
If you do not register for PGST and are required to, you may have to pay PGST on sales made since the date you were required to register. This could happen even if you did not include PGST in the price of those sales, and you may also have to pay penalties and interest.
How to calculate the PGST inclusive price on goods and services in Palau
To reprice your goods and services ready for January 1, 2023, follow the steps below.
- Remove any existing taxes in markups that are being removed or modified on Jan 1, 2023 as part of tax reform, for example import tax and the carbon tax is being reduced for all taxpayers.
- Consider including any new taxes in mark-ups, except PGST, for example domestic manufacturers of excisable goods may need to include domestic excise taxes in their prices.
- Once the PGST-exclusive price (i.e. the price before PGST is added) of a taxable supply is determined, PGST at the rate of either 10% or 0% is added giving the PGST-inclusive price.
This calculation gives you the PGST inclusive price for your products, service, or menu, and is the final price paid by the purchaser. This is the price you must display for your customers, wherever you display your prices (e.g. menus, catalogues, in store, on website).
PGST invoices
If your business charges PGST on goods or services, you will need to provide a specific kind of invoice called a PGST invoice. This invoice must clearly show whether the supply made was a taxable supply or an exempt supply and if a taxable supply, the amount of PGST that was charged.
To claim a credit for the PGST you paid on the goods and services you purchased for your business, you must have a valid PGST invoice.
You need to consider now, what you need to do to be able to meet the PGST invoice requirements by January 1, 2023. Some things to consider are:
- having a working printer ready to print PGST invoices
- having a rubber stamp (PGST invoice template) for temporary use in the event the power goes off and you are unable to print a PGST invoice (a stamp with your name, address and TIN can be useful)
- keep accurate records
- modify/update point-of-sale systems (e.g. cash registers, invoice systems) to account for the PGST you collect, and to supply valid PGST invoices.
PGST invoices for supplies with a value below $1,000
To be a valid invoice, a PGST invoice for supplies with a value below $1,000 must include the following:
- name, address and TIN of the supplier
- unique invoice serial number and issue date of the invoice
- description of the goods or services supplied, including the quantity or volume
- date the supply was made
- price of the goods or services supplied and the amount of PGST charged
- identification of goods that are exempt or zero rated
- PGST inclusive price.
You can detail each item or have a total and one PGST amount if all goods are taxable supplies at 10%.
Example
PGST invoices for supplies with a value greater than $1,000
To be a valid invoice, a PGST invoice for supplies with a value greater than $1,000 must include the following:
- name, address, and TIN of the supplier
- name and address of the recipient
- unique invoice serial number and issue date of the invoice
- description of the goods or services supplied, including the quantity or volume
- price of the goods or services supplied and amount of PGST charged
- identification of goods that are exempt or zero rated
- PGST inclusive price
- any other information the BRT requires.
You can detail each item or have a total and one PGST amount if all goods are taxable supplies at 10%.
Example
PGST invoices supplied to someone who is not PGST registered
Providing an invoice in the same format as a PGST invoice, to a non PGST registered person, is acceptable (however the non PGST registered person cannot use it to claim PGST credits).
However, a customer who is not registered for PGST cannot require you to provide them with a PGST invoice. You may provide them with an invoice in any format, provided that it shows:
- the price is PGST inclusive, and
- if the goods are exempt (not taxed) or if taxable supplies, what tax applies.
Invoices supplied by someone who is not a PGST registered person
Invoices supplied by businesses that are not registered for PGST will not show any PGST amounts being withheld. Only registered PGST businesses can add PGST to their prices.
Stocktake
Complete a stocktake of your inventory on hand on December 31, 2022
You must complete a stocktake of your inventory on hand on December 31, 2023.
You will need these records to correctly calculate your allowable deduction for the cost of inventory, and your taxable income in the 2023 Business Profits Tax Return.
You may be able to claim the 3% import duty you paid on your inventory on hand, if you paid for the inventory between September 1, 2022 to December 31, 2022, and it is still on hand at December 31, 2022.
To be eligible to claim the transitional input tax credit for inventory, you must:
- be registered for PGST by January 1, 2023
- complete a stocktake of your inventory for December 31, 2022, identifying goods that were imported between September 1, 2022, and December 31, 2022, and subject to a 3% import duty
- have supporting purchase / import details and inventory stocktake records
- complete the inventory on hand form
- file a list of the inventory and supporting records of payment of import tax during the relevant period, with your first PGST return for January 2023 (due to be filed in March 2023).
Help and support
If you need support to register, understand the new pricing and invoicing requirements or to file and pay, help is available.
Visit us in the BRT office or call us on (680) 488-3303 or (680) 488-2580.