Palau
Micronesia · PW · 0 treaties
What is the tax system in Palau?
Palau operates a territorial tax system. The top personal income tax rate is 12%, and the corporate tax rate is also 12%.
Tax profile
| Corporate income tax | 12% |
| Withholding — dividends | 0% |
| Withholding — interest | 0% |
| Withholding — royalties | 0% |
| VAT / GST (standard) | 10% |
| Personal income (top rate) | 12% |
| Capital gains | n/a |
| Tax system | Territorial |
| Residency threshold | — |
| Exit / departure tax | No |
| CFC rules | No |
| Transfer pricing | None |
| Digital nomad visa | No |
| Digital services tax | none |
| Global minimum tax (Pillar 2) | None |
Common questions
- What are the main tax rates in Palau?
- The top personal income tax rate in Palau is 12%, and the corporate tax rate is 12%. The standard VAT rate is 10%.
- Does Palau have a tax treaty network?
- Palau has 0 tax treaties.
- Are dividends taxed in Palau?
- There is a 0% dividend withholding tax in Palau.
Tax residency
Easy to leaveWhat makes you a tax resident — and how hard it is to stop being one.
- resident: individual is present in Palau for at least 183 days in the tax year
- resident: individual has a permanent home or usual place of abode in Palau (implied by resident vs non-resident distinction)
- non-resident withholding: individual is non‑resident but derives Palau‑source interest, royalties, or insurance premiums
Palau does not tax an individual’s foreign‑source personal income even if they meet the 183‑day residence test, and residents are distinguished from non‑residents primarily by presence and source of income, so ceasing residence is generally achieved by leaving and not having Palau‑source employment or business income.
Source: Palau Bureau of Revenue & Taxation, Ministry of Finance (palaugov.pw)