- Brackets updated
migrated from the production database; research reasoning not recorded.
Top income tax
12.0%
Territorial system
Corporate tax
12.0%
PGST
10.0%
standard rate
Tax residency
—
Palau tax profile
Data year: 2026
- Tax system
- Territorial Palau taxes employment income through a wages-and-salary withholding tax (6% / 10% / 12% bands). Most goods and services consumed in Palau are subject to 10% Palau Goods and Services Tax (PGST) from 1 January 2023. Businesses registered for PGST pay 12% Business Profits Tax (BPT) on net income (gross Palau-source revenue less allowable deductions) instead of gross-revenue tax. Non–PGST businesses remain on 4% Gross Revenue Tax (GRT) on quarterly gross receipts from Palau sources, with wage-cost deductions. Currency is the US dollar. Compact of Free Association with the United States; no general income-tax treaty network.
- Top PIT rate
- 12.0%
- Corporate tax rate
- 12.0%
- PGST
- 10.0%
- Capital gains tax
- --
- Social security (employee)
- --
- Social security (employer)
- --
- Dividend withholding
- --
- Interest withholding
- 10.0%
- Royalty withholding
- 10.0%
- Treaty count
- --
Income tax brackets
Corporate
| Bracket min | Bracket max | Rate |
|---|---|---|
| USD 0 | and above | 12.0% |
Personal income
| Bracket min | Bracket max | Rate |
|---|---|---|
| USD 0 | USD 8,000 | 6.0% |
| USD 8,001 | USD 40,000 | 10.0% |
| USD 40,001 | and above | 12.0% |
Tax flags
Territorial Exemption
Tax residency
- Residency rules
- Business taxes distinguish resident and non-resident taxpayers (for example on BPT returns and non-resident withholding). Non-residents pay 10% withholding on Palau-source interest, royalties and technical fees (5% on insurance premiums) unless income is attributable to a permanent establishment and taxed through BPT. The Bureau materials reviewed do not set a simple day-count test for individual income-tax residence; wages tax applies to compensation for work performed in Palau regardless of employer location.
- Exit tax
- No
- CFC rules
- No
Filing information
- Fiscal year
- 01-01 – 12-31
- Filing deadline
- BPT annual return 3 months after year-end; quarterly installments by the 15th
Sources
- Palau BRT — tax topics overview (accessed Oct 9, 2026) PGST 10%, BPT 12%, GRT 4%, wages and salary tax brackets, non-resident withholding, GRT/BPT definitions
- Palau BRT — business profits tax (accessed Oct 9, 2026) BPT rate, net-income base, installments, annual return deadline, exempt income including resident dividends
- Palau BRT — fiscal year 2023 annual report (accessed Oct 9, 2026) Post-reform revenue mix; GRT 4% on gross revenue above USD 50,000 up to USD 300,000; wage tax band summary
- IMF — Palau 2023 Article IV staff report (accessed Oct 9, 2026) 2023 comprehensive tax reform including PGST and BPT; no bilateral income-tax treaty network discussed
Change history
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- Brackets updated
migrated from the production database; research reasoning not recorded.
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- Brackets updated
migrated from the production database; research reasoning not recorded.
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- Brackets updated
migrated from the production database; research reasoning not recorded.
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- Brackets updated
migrated from the production database; research reasoning not recorded.
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- Brackets updated
migrated from the production database; research reasoning not recorded.
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- Brackets updated
migrated from the production database; research reasoning not recorded.
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- Brackets updated
migrated from the production database; research reasoning not recorded.
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- Brackets updated
migrated from the production database; research reasoning not recorded.
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- Brackets updated
migrated from the production database; research reasoning not recorded.