Palau: New Tax on Remittance and Money Transfer – VIDEO

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A new 4% tax on all money wired out of Palau has been signed into law.  The last page and a half of the mandatory retirement bill contained rider that is a remittance and money transfer tax that will begin on October 30, ailment 2013.  Under the new law any remittance or transfer of money outside of Palau by a non-citizen will have a 4% tax levied.  The tax will be collected by banks and remittance companies and paid to the Minister of Finance on the fifteenth of every month.  All of the money collected will be given to the Civil Service Pension Plan which is only accessible by government workers.  Upon signing the bill, order the President expressed concern over the use and definition of the word transfer, and how that creates debate over what activities may be illegal?  The new remittance and transfer tax targeted at foreigners goes into effect the same day as the first phase of the increase of minimum wage that will increase salaries by 25 cents.  On $2.75 the tax will be 11 cents.  Delegate Isaechal, who introduced the bill, explained to OTV that the bill is targeted at foreign workers who remit millions of dollars a year.  He explained that this is a good way to supplement the troubled Civil Service Pension Plan.  OTV has received reports that banks and businesses have expressed concern over the new law.