PGST tax reform
From January 01, 2023 most goods and services sold or consumed in Palau will be subject to 10% Palau Good and Services Tax, or PGST.
Generally, businesses registered for PGST will:
- include PGST in the price they charge for their goods and services
- claim credits for the PGST included in the price of goods and services they buy for their business.
Businesses collect PGST for the government whenever they sell goods and services and then pay this revenue to the Bureau of Revenue and Taxation (BRT). The government then distributes the PGST collected to pay for public services and infrastructure such as hospitals, roads, and schools.
Registration for PGST automatically registers you for Business Profits Tax (BPT). BPT will be introduced and replace Gross Revenue Tax for all businesses registered for PGST from January 01, 2023.
How to register
You can register for PGST by completing the relevant registration forms:
- New to business – Tax-001-Taxpayer-
- Existing business – updating contact information form – Tax-001C-Taxpayer-Information-
Update-Form followed by completing Tax-001H-Tax-Category- Registration-Form
Use one of these options to lodge the forms:
- email the completed form to firstname.lastname@example.org
- bring it to us at the BRT office
Bank account information will need to be submitted in person at the BRT office.
What you need to know
If you conduct multiple businesses
If a person conducts multiple businesses, the PGST registration threshold is determined by the value of taxable supply made by the person’s businesses collectively. A person carrying out a particular business in divisions or branches will be treated as a single business.
Compulsory PGST registration
You are required to register for PGST if you meet any of the following:
- you have an average annual taxable supply of more than $300,000 (see PGST registration guide for more information)
- you hold a Foreign Investment Approval Certificate (FIAC), even if you are below the registration threshold amount
- you are one of the following State-owned enterprises:
- Palau Public Utilities Corporation
- Palau National Communications Corporation
- Belau Submarine Cable Corporation.
You are exempt from compulsory registration if you are:
- a person operating a public or private hospital
- a person operating a public or private medical clinic
- a not-for-profit education institution
- the Palau Community College
- a government entity of a type different to those listed under compulsory registration
- a non-profit corporation.
Voluntary PGST registration
If you are not required to register for PGST, you can apply for voluntary registration if you meet the following requirements:
- you are making, or intend to make taxable supplies
- you conduct your business from a fixed location
- you have commenced conducting business, and:
- you have kept proper records of your business operations
- you have complied with your tax obligations
- you understand you will need to comply with your PGST reporting and record keeping obligations
- it is reasonably expected the annual value of taxable supplies made by the person will equal or exceed $50,000.
If you voluntarily register for PGST you can:
- claim back the PGST you pay on purchases, including capital items used to make taxable supplies
- claim back PGST you pay on business set-up costs.
Some businesses may prefer to purchase from PGST registered businesses, so they are able to claim back the PGST they pay.
When to register
Do not delay. Register now.
You must complete registration by December 31, 2022 if you are within the compulsory registration categories. Penalties and interest may apply if you register after that date.
If you do not register
If you are required to register for PGST but do not register, 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. Penalties and interest may also apply. The Director may register you if he considers you meet the threshold test.