Gross Revenue Tax to be replaced by Goods and Services Tax 2023
The Pacific island state of Palau is to introduce a Goods and Services Tax (GST) from 1 January 2023. The new indirect tax system will be based on the broad-based Australian GST regime.
Palau joining the global VAT family will take the number of countries with VAT to 174.
GST replaces Gross Revenue Tax
This will replace the existing Gross Revenue Tax (GRT). The key features will include:
- The GST registration threshold will be USD300,000;
- Exports will be zero rated;
- Imports liable to GST; and
- Financial services will be exempt
Palau’s tax regime of using GRT favours large, established, vertically-integrated businesses, while disadvantaging small start-ups, family businesses and boutique operations, and also GRT discourages international investment. GRT is not well suited to the service-based high-value tourism economy the Republic is striving to build.