# Palau

 Country code: PW · Currency: USD · Language: English

**Pros**
- Strategic use of the US Dollar providing monetary stability and eliminating currency exchange risks.
- High level of personal safety and political stability within a peaceful, low-crime Pacific environment.
- Pristine natural surroundings and world-class marine ecosystems offering an exceptional, secluded lifestyle.

**Cons**
- Constitutional prohibitions on foreign land ownership and specific business sectors reserved for local citizens.
- High operational costs due to geographic isolation, expensive imports, and limited infrastructure reliability.
- Recent implementation of Goods and Services Tax increasing bureaucratic compliance and state regulatory oversight.

Long story short: In Palau, nobody from the tax office will ever hunt you down: there's no income tax to speak of, just a light wage tax and a gross revenue tax of a few percent on business turnover, no VAT, no capital gains tax. Nobody checks your books because nobody has the manpower or the will to.

The catch: you can't just show up and open a shop. Most sectors are reserved for citizens, so you need a local majority partner and a Foreign Investment Board permit that can sit on someone's desk in Koror for months. Banking is thin, two branches of American banks, US dollar economy, and getting a loan as a foreigner is basically a fantasy. Anything that isn't fish or coconuts arrives by boat at inflated prices.

Beyond that: corruption is low by regional standards but everyone knows everyone, so favors move on family lines. Crime is close to nonexistent in Koror's nicer streets, infrastructure is basic but workable since the new internet cable, seafood is excellent and cheap, and the diving and lagoons are genuinely world class, among the best on the planet.

## Will your income be taxed?

Long story short: NO.
**Palau** doesn't tax personal income, and nobody comes sniffing around when you settle in. No withholding, no tax return, no centre-of-vital-interests trap waiting to snap shut.

Earn what you want: the taxman here simply doesn't know your name.

**01.1 Income tax**

| Metric | Value | Detail |
| --- | --- | --- |
| Personal income tax | NONE | no personal income tax framework |

**01.2 Tax residence test**

| Metric | Value | Detail |
| --- | --- | --- |
| 183-day rule | does not exist here |  |
| Economic interest | does not exist here |  |
| Family centre | does not exist here |  |
| Habitual abode | does not exist here |  |
| Extended-stay test | does not exist here |  |

## Will your wealth be taxed?

Long story short: NO.
**Palau** keeps its hands off what you hold. *No capital gains tax*, no annual wealth grab, no inheritance regime.

Your portfolio compounds in peace and leaves the way it came in; nobody's standing at the door with their palm out.

**02.1 Investment income**

| Metric | Value | Detail |
| --- | --- | --- |
| Capital gains | NONE | no capital gains regime |
| Dividend tax | NONE | no dividend tax |
| Interest income | NONE | no interest income tax |

**02.2 Wealth & estate**

| Metric | Value | Detail |
| --- | --- | --- |
| Wealth tax | NONE | no annual wealth tax · no real-estate wealth tax · no net-worth assessment |
| Inheritance system | NONE | no estate tax · no heir-based duties · no succession tax framework. Wealth transfers across heir-classes are not taxed in this jurisdiction. Only standard probate / registration fees may apply. |

**02.3 Crypto**

| Metric | Value | Detail |
| --- | --- | --- |
| Crypto · tax regime | ZERO TAX | Rate: 0% · Palau does not impose a capital gains tax on individuals. Following the 2023 tax reform (RPPL 11-11), individual taxation is strictly limited to the 'Wages and Salary Tax' (6-12%). Casual investment gains are not considered wages and are therefore not taxed. However, professional or high-frequency trading is treated as a business activity subject to the 12% Business Profits Tax (BPT) on net income. |
| Crypto-to-crypto | NEUTRAL | a swap is not a taxable realisation event |
| FATF travel rule | NOT SIGNED | no information-sharing obligation on VASP transfers |

## Easy to run a company there?

Long story short: YES.
**Palau** is maximum operational chill: *no corporate income tax* on standard profits, *no criminal liability* for misuse of corporate assets, and *non-public* registries.

The state doesn't take a cut, doesn't park a prosecutor over your intra-company flows, and doesn't put your name in a search box.

VAT sits at **n/a**. Run your thing; nobody's looking over your shoulder.

**03.1 Rates**

| Metric | Value | Detail |
| --- | --- | --- |
| Corporate tax | NONE | no corporate income tax framework |
| VAT standard rate | NONE | no general VAT · no consumption tax framework |

**03.2 Regime & registry**

| Metric | Value | Detail |
| --- | --- | --- |
| IP Box · Patent Box | NONE | no IP regime · IP income taxed under standard corporate rules |
| Misuse of corporate assets | NO CRIMINAL | no criminal liability · Palau's legal system is based on US Common Law and the American Model Business Corporation Act (12 PNCA). Under these principles, a sole director who is also the sole shareholder cannot be prosecuted for criminal theft or embezzlement (17 PNCA § 2602) of corporate assets while the company is solvent. This is because criminal 'theft' requires the taking of 'property of another' without consent; in a sole-owner scenario, the owner's consent negates the 'unlawful' element of the taking. Such actions are instead treated as civil breaches of fiduciary duty, tax issues (constructive dividends), or grounds for 'piercing the corporate veil' to hold the individual liable for corporate debts. |
| Shareholders privacy | PRIVATE | Office of the Registrar of Corporations |
| Directors privacy | PRIVATE | Office of the Registrar of Corporations |

**03.3 Incorporation cost**

_In this country, the most standard company form is called Domestic Corporation. The costs below are for incorporating a company in its simplest form, for reference only._

| Metric | Value | Detail |
| --- | --- | --- |
| Articles of Incorporation Filing Fee (FIC Registry) | USD 250 |  |
| Foreign Investment Approval Certificate (FIAC) Application Fee | USD 500 |  |
| National and State Business License Fees | USD 150 |  |
| Professional Legal and Incorporation Services (FIAC Support) | USD 3,500 |  |
| Total | USD 4,400 |  |

## A good fit for a holding?

Long story short: NO.
**Palau** has no treaty network at all, which buries the holding question, full stop.

Every dividend in or out eats the statutory withholding at full rate, and no domestic regime can patch a hole that sits on the source side. Don't park a holding here.

**04.1 Substance & exemptions**

| Metric | Value | Detail |
| --- | --- | --- |
| Territorial · individuals | TERRITORIAL | territorial — foreign-source income generally untaxed |
| Territorial · corporates | TERRITORIAL | territorial principle — foreign-source profits generally exempt |
| Participation exemption | NONE | no dividend participation exemption regime |
| CFC rules | NONE | no controlled foreign corporation regime · foreign-source corporate income out of scope |

**04.2 Withholding tax · non-resident**

| Metric | Value | Detail |
| --- | --- | --- |
| WHT · dividends | NONE | no withholding on outbound dividends |
| WHT · interest | NONE | no withholding on outbound interest |
| WHT · royalties | NONE | no withholding on outbound royalties |
| Tax-haven WHT | NONE | no punitive rate on record |

**04.3 Treaty network**

| Metric | Value | Detail |
| --- | --- | --- |
| Treaties signed | 0 | active |
| Treaties pending | — | in negotiation |

## Easy to come and go?

Long story short: LITTLE.
Coming and going from **Palau** costs you nothing worth mentioning. *Territorial* regime (foreign income stays foreign), *no exit tax* at the door.

You show up with your stuff, you leave with your stuff, plus whatever you earned abroad in between. Borders the way they should all work.

**05.1 Exit & dual nationality**

| Metric | Value | Detail |
| --- | --- | --- |
| Exit tax | NONE | no triggers active · residence change tax-free · no deemed-disposal mechanism |
| Dual citizenship | FORBIDDEN | naturalisation requires renouncing existing citizenship |

**05.2 Citizenship paths**

| Metric | Value | Detail |
| --- | --- | --- |
| Residence | — | not available |
| Marriage | — | not available |
| Birth | — | not available |
| Descent | — | not available |
| Investment | — | not available |

## Is your money watched?

Long story short: NO.
Nobody's reading over your shoulder in **Palau**. It has joined *almost none* of the big automatic-exchange machines (CRS, FATCA, CARF, MLI, MAAC), and its corporate registries are *non-public*.

Your account movements stay out of foreign tax offices; your name stays out of search boxes. Here, discretion isn't a perk; it's the factory setting.

**Multilateral reporting frameworks — 0/9 active · 1 pending**

| Item | Status | Detail |
| --- | --- | --- |
| CRS | None | — |
| CARF | None | — |
| FATCA | None | — |
| MLI | None | — |
| BEPS | None | — |
| MAAC | None | — |
| GLOBAL FORUM | Signed | — |
| EOIR | None | — |
| CRYPTO TRAVEL RULE | None | — |

## Is it blacklisted?

Long story short: YES.
**Palau** stacks the *EU non-cooperative list* on top of national blacklists. Counterparties routinely fire anti-abuse rules, jack up withholding, or refuse the deal entirely, and the EU layer makes the friction automatic across the whole bloc.

The jurisdiction itself is the risk; the substance of what you do there is a footnote.

**Blacklist exposure — Listed by 4 authorities**

| Item | Status | Detail |
| --- | --- | --- |
| EMBARGO | Clear | un / us / eu sanctions |
| FATF | Clear | grey / black list |
| EU | Listed | non-cooperative list |
| FRANCE | Listed | ETNC list |
| SPAIN | Listed | tax-haven list |
| PORTUGAL | Listed | favourable regimes |
| BRAZIL | Clear | low-tax list |

## Do you feel free there?

Long story short:
Not enough data to tell how free you'd actually feel in **Palau**.

**08.1 Press freedom**

| Metric | Value | Detail |
| --- | --- | --- |
| Press freedom · RSF index | — |  |

Central bank digital currency

    Program Status Cross-border Sources     Palau Stablecoin

Surangel Whipps Jr., President of Palau, mentioned since Palau does not have an established central bank and uses USD as its currency, their goal is to have a USD-backed stablecoin, which is really a step toward a CBDC, Surangel Whipps Jr. suggests.

   PROOF OF CONCEPT   —   [announce →](https://www.palaugov.pw/wp-content/uploads/Palau-National-Payment-System-Phase-2a-Final-Report.pdf "Announcement")

 programs 1

## Connected to the world?

Long story short: POORLY CONNECTED.
The two rails that matter are both dead in **Palau**. *Stripe* won't onboard you, so card payments mean a foreign structure or a local processor with its own rules. *Amazon* doesn't deliver either.

Some secondary services run (**3/11**), but for an online business this is swimming against the current.

**Accept payments — 1/6 available**

| Item | Status | Detail |
| --- | --- | --- |
| Stripe | Not available | card payments |
| PayPal | Not available | wallet payments |
| Adyen | Not available | enterprise psp |
| Mollie | Not available | eu payments |
| GoCardless | Not available | direct debit |
| Paddle | Available | merchant of record |

**Bank and move money — 1/3 available**

| Item | Status | Detail |
| --- | --- | --- |
| Wise | Available | multi-currency |
| Revolut | Not available | personal banking |
| Revolut Business | Not available | business banking |

**Buy and sell on Amazon — 1/2 available**

| Item | Status | Detail |
| --- | --- | --- |
| Amazon | Not available | consumer delivery |
| Amazon Seller | Available | marketplace selling |

  SEE ALSO## Other jurisdictions worth comparing

Picked by similarity of strategic profile to Palau. No editorial ranking — neighbours in the same scoring space.

  PROFILE-ADJACENT Same shape, comparable overall friction.

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