Good to know
Good to Know
- Palau's currency is the US dollar, so there's no exchange-rate risk or conversion step for fees or capital.
- Owning land outright is not an option for foreigners — every business premises will involve negotiating a lease with a Palauan citizen, clan, or family, and land-lease negotiations can take real time and relationship-building before you can even finalize your FIAC application.
- Certain everyday business categories — retail/wholesale sales, tour operating, and commercial fishing — are legally reserved for Palauan citizens only, so check your intended activity against the restricted list before investing time in the process.
- Even 'semi-restricted' sectors typically require bringing in a Palauan joint-venture partner, so budget time to find and formalize that relationship.
- The Foreign Investment Board's 90-day decision window is a maximum for complete applications — incomplete paperwork or missing lease/zoning documentation is a common cause of delay.
- It's genuinely worth engaging a local attorney or licensed corporate service provider familiar with the Registrar of Corporations and FIB, since sources report the paperwork chain (charter → FIAC → TIN → license) has to be sequenced correctly.
- Palau uses the US dollar, so there's no local-currency conversion to worry about for business taxes — amounts are already in USD.
- Palau overhauled its business tax system on January 1, 2023: a 12% Business Profits Tax (on net income) plus a 10% PGST replaced the older Gross Revenue Tax regime for most PGST-registered businesses — so any information you find online describing Palau as a '0% corporate tax' or flat 4%/21% jurisdiction is very likely outdated or inaccurate and should not be relied on.
- BPT is paid via quarterly installments during the year, with the annual return reconciling the total liability — budget for cashflow across the year rather than a single year-end tax bill.
- If your annual gross income stays under $50,000 and you're not registered for PGST, you may fall under the simpler Gross Revenue Tax track rather than BPT — but crossing that threshold changes your tax treatment, so track your revenue.
- Because reliable, specific guidance on the foreign-investment permit process for non-citizen business owners was not verifiable through official sources at the time of research, treat any online claims about that specific process with caution and verify directly with Palau's national government before setting up.
Core Steps
- Step
- Obtain a corporate charter from the Registrar of Corporations
- Detail
- Before applying for foreign investment approval, corporations, joint ventures and partnerships must first obtain a charter from the Registrar of Corporations, located at the Office of the Attorney General.
Draft and file incorporation documents
- Detail
- Articles of incorporation, bylaws, and (for LLCs) an operating agreement must be drafted and filed. Palauan law does not require directors or shareholders to be Palau residents, so founders and managers can be entirely foreign.
Apply for a Foreign Investment Approval Certificate (FIAC)
- Detail
- Non-citizens wishing to invest in Palau must obtain a Foreign Investment Business License via a FIAC from the Foreign Investment Board. The Board reviews complete applications and decides within 90 days. Corporate applicants must submit a certified copy of the articles of incorporation/charter/bylaws, an officer's affidavit stating authorized capital stock, and must designate a person residing in Palau who can accept legal service of process on the company's behalf.
Secure land/premises
- Detail
- Foreigners cannot own land in Palau (all land is owned by Palauan citizens, clans, or families via complex family lineages), but they can lease land and own buildings on leased land. A provisional lease/site agreement, including title search and any zoning clearance, is typically arranged in parallel with the FIAC application since a physical business address is required.
Register for tax with the Bureau of Revenue & Taxation
- Detail
- Registered businesses must obtain a Tax Identification Number (TIN) from the Palau Bureau of Revenue and Taxation, and register for the Palau Goods and Services Tax (PGST, 10%) or Business Profits Tax (12% on net income, quarterly) depending on turnover; businesses under $50,000 annual gross income are exempt from PGST/GRT but still pay a business license fee.
Obtain a national/state business license
- Detail
- All businesses operating in Palau must apply for a business license from the Ministry of Finance / Corporate Registry, plus any applicable state-level license and sector-specific permits (e.g. tourism, fisheries, environmental, construction).
Register for Social Security / EIN and any work permits
- Detail
- An Employer Identification Number (EIN) must be obtained from the Social Security Administration, and any foreign staff need individual work/entry permits, which generally require the employer to first advertise the position locally for 30 days to prove a Palauan could not be hired.
Typical Costs
- Social Security Number Fee
- $2.00
- Other Likely Costs
- Legal/notary fees for drafting incorporation documents, a registered-agent fee if using a service provider, and land-lease costs (since land itself cannot be purchased).
- Fiac Application Fee
- $500
Annual Business License Fee
- Note
- Varies by industry and business scale; businesses under $50,000 annual gross income pay a flat business license fee instead of PGST/Business Profits Tax.
Government Incorporation Filing Fees
- Currency Local
- USD
- Amount USD Range
- roughly 200–2,000
- Amount Local Range
- roughly 200–2,000
- Note
- Set by the Ministry of Finance/Corporate Registry depending on entity type and authorized capital; varies by business type and scale.
Business Tax And Structure Options
- Overview
- Palau's Bureau of Revenue & Taxation (BRT) administers a tax system that underwent a major reform on January 1, 2023, replacing the old Gross Revenue Tax (GRT) regime for most businesses with a Business Profits Tax (BPT) and a broad-based Palau Goods and Services Tax (PGST). Palau's official currency is the US dollar, so all figures below are already in USD.
Gross Revenue Tax
- Threshold
- $50,000
- Description
- Applies only to individuals/entities NOT registered for PGST, where annual gross income exceeds a threshold.
- Threshold Note
- Above this annual gross income level, a non-PGST-registered person/entity is captured by GRT rather than BPT.
Business Profits Tax
- Rate Percent
- 12
- Basis
- net income (gross revenue less allowable deductions), not gross turnover
- Tax Year
- A 12-month period ending on the date a company balances its financial accounts; many companies use the calendar year, but non-company taxpayers default to the calendar year (Jan 1–Dec 31).
- Filing Cycle
- Quarterly BPT installment payments during the tax year, with an annual BPT return filed at the end of the tax year; installments are then credited against the final annual liability.
- Installment Calculation
- Standard installment is normally based on 25% of the prior year's total BPT liability; businesses can apply to the Director of BRT to vary this if they expect lower profits.
- Loss Carryforward Years
- 4
- Description
- The main tax on company/business income for entities registered for PGST.
- Note On Source
- Replaces the old Gross Revenue Tax for PGST-registered businesses
Foreign Ownership Tax Treatment
- Note
- The official Palau tax reform materials describe BPT/PGST as applying to businesses generally (domestic and foreign-owned) once registered, rather than setting a separate headline rate specifically for foreign-owned companies. We could not verify, from an authoritative source, any distinct statutory corporate tax rate that applies only to foreign-owned entities as opposed to Palauan-owned ones under the current BPT/PGST system.
Palau Goods And Services Tax Pgst
- Rate Percent
- 10
- Exports
- Zero-rated
- Collection Mechanism
- PGST-registered businesses charge PGST on sales and remit it to the government; the end consumer bears the cost.
- Description
- Broad-based consumption tax on most goods and services sold/consumed in Palau, introduced January 1, 2023, replacing the old hotel room tax and other consumption taxes.
Sole Proprietor Freelancer Vs Company
- Recommendation
- Anyone planning a longer-term, ongoing commercial activity (as opposed to occasional remote-work income earned from clients outside Palau) should confirm current foreign investment permit and business registration requirements directly with Palau's national government before assuming they can simply invoice as an individual.
- General Distinction
- Below the PGST/BPT registration threshold, small operators can be taxed as individual/non-registered persons under the GRT rules; once revenue is large enough (or a business voluntarily registers for PGST), it moves into the BPT + PGST regime that applies to registered companies and other business entities alike.
- Foreign National Caveat
- Practically, most foreign nationals wanting to run an ongoing commercial activity in Palau operate through a registered company rather than as an informal individual freelancer, because Palau's foreign investment rules govern who may conduct business locally as a non-citizen. We were not able to confirm the specific current procedural requirements (e.g. exact foreign investment permit/certificate process) from an authoritative primary source at the time of research, so this point should be treated as a general practical pattern rather than a confirmed step-by-step legal requirement.
Foreigners can own and operate businesses in Palau, but any non-citizen investment requires government approval on top of standard corporate registration. The core legal framework is the Foreign Investment Act (Palau National Code, Title 28, Chapter 1), administered by the Foreign Investment Board (FIB).
Realistic Timeline
- Overall Estimate
- Commercial incorporation-service providers estimate 3–6 weeks for the full registration package to be completed, though the FIAC step itself can legally take up to 90 days if the Board needs the full review period.
- Tin Registration
- roughly 1–2 working days
- Document Notarization
- around 1 working day
- Registrar Of Corporations Review
- roughly 7–14 working days
- Name Reservation And Structure Choice
- around 1 working day
- Fiac Decision By Foreign Investment Board
- up to 90 days for a complete application, per the U.S. State Department's investment climate statement
Official Government Links
Local Partner Or Sponsor Rules
- Director Residency
- No requirement for local residents to serve as directors or shareholders — 100% foreign ownership is legally possible for most sectors.
- Semi Restricted Sectors
- Other sectors are classified as semi-restricted, meaning foreign investors must bring in a Palauan partner/joint venture to operate.
- Restricted Sectors Citizens Only
- Foreign Investment Regulations reserve certain sectors exclusively for Palauan citizens, including wholesale or retail sale of goods, all land and water transportation, travel and tour agencies, and commercial fishing, plus "any such other businesses as the Board may determine."
- Mandatory Local Agent For Service
- Non-citizen corporate applicants must designate a person residing in Palau to accept legal service of process, and any foreign investor issued a FIAC automatically stipulates to Palauan court jurisdiction, with the Vice President of the Republic as default agent for service if no local agent is on file.
AI-generated estimateData refreshed July 2026
Sources cited for this category
These are the sources cited in this business permits & incorporation for foreigners research for this city. Individual figures may not each trace to one of them.
More About Palau
Data last updated July 2026 · Verify anything important.