🇵🇼 Palau Tax Guide - Income Tax, Corporate Tax & Special Regimes

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: Rate not recorded
Social security (employee): Rate not recorded
Social security (employer): Rate not recorded
Dividend withholding: Rate not recorded
Interest withholding: 10.0%
Royalty withholding: 10.0%
Treaty count: Treaty count not recorded

Corporate

Corporate brackets
Bracket min	Bracket max	Rate	USD equivalent
USD 0	and above	12.0%	$0 +

Personal income

Personal income brackets
Bracket min	Bracket max	Rate	USD equivalent
USD 0	USD 8,000	6.0%	$0 – $8,000
USD 8,001	USD 40,000	10.0%	$8,001 – $40,000
USD 40,001	and above	12.0%	$40,001 +

Territorial Exemption

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

Fiscal year: 01-01 – 12-31
Filing deadline: BPT annual return 3 months after year-end; quarterly installments by the 15th

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

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