Tax
10% Palau Goods and Services Tax from 2023 replacing gross revenue tax
Palau introduced a 10% goods and services tax in January 2023, replacing the gross revenue tax for most businesses, alongside net income tax on businesses and a wages tax.
Key rules
- Jurisdiction — National, administered by the Bureau of Revenue and Taxation. State governments levy limited local charges.
Governing law
- Palau Goods and Services Tax ActRPPL 11-11
- Palau National Code, title 40taxation
- Wages and salaries tax, PNC title 40
- Environmental impact fee (Pristine Paradise) legislation
In practice
Palau's 2023 reform is the most substantial recent tax change in the region: the Palau Goods and Services Tax Act introduced a 10% consumption tax with registration thresholds and input credits, replacing the gross revenue tax for most businesses and moving Palau from taxing turnover to taxing value added and profit. Businesses became subject to net income tax on profit, which required deduction and accounting rules the previous system did not need, so pre-2023 secondary sources describing a simple gross revenue regime are now wrong. Wages and salaries tax continues to be withheld at graduated rates. There is no capital gains tax and no inheritance tax. Tourism-specific charges matter fiscally, notably the environmental impact fee collected from departing visitors and funding conservation, which reflects the same policy logic as the marine sanctuary.