Article
3 min read
Author
Anja Simic
Published
September 17, 2021
Last Update
July 08, 2024
Table of Contents
Sole Proprietorship Registration Proces in Palau
Obtaining a certificate of incorporation in Palau
Taxation System in Palau
Located in the Pacific between the Philippines and New Guinea, this country has 26 main islands, of which eight are permanently inhabited. Palau currently has about 18,000 inhabitants, while the capital Ngerulmud has 271 inhabitants. The largest part of GDP consists of inflows from Tourism. Palau imports the most oil, machinery, and equipment, and the largest partners are Japan, Singapore, and South Korea.
_Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action._
To register a sole proprietorship in Palau, one should follow the instructions below.
The process of obtaining a certificate of incorporation takes about 14 days if everything is in order with your papers. You register your business in the Corporate Register at the Office of the Attorney General. This part of the registration process does not require any additional costs, as they are covered within a fee that has already been paid.
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Any person carrying out commercial activities must be registered with the Bureau of Revenue and Taxation. Any tax must be reported and paid on time to avoid paying a 10% penalty.
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.
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.
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).
VAT in Palau is 7.5%. To register, you need to fill out forms and submit them to the Bureau of Revenue and Taxation. Forms can be found on the official website of BRT. When it comes to VAT refund forms, you can also find them on the same website.
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