The new remittance tax, click which requires non-Palauans to pay 4% on money wired out of Palau, has been highly criticized.
In a letter dated May 14th, Kaleb Udui Jr Palau’s Chamber of Commerce President asked President Remengesau to repeal the remittance law.
Udui Jr. expressed his concern that not only does the new tax unfairly discriminate against foreigners in violation of Palau’s Constitution, it also imposes a double tax as the same funds that are subject to Gross Receipts Tax are also subject to this new 4% remittance tax.
Additionally, the measure, he says, poses practical problems on an operational level. He points out that it does not include guidance for financial institutions to determine whether the transfer is taxable. Udui also noted that there is no definition of non-citizen or transferor in the law.
In a press conference earlier this week, President Remengesau said the law will not take effect until October 2013, so the impact is not clear. He expressed his support for the new tax saying some of the money earned in Palau should be retained.
A lawsuit challenging the new measure is rumored to be in development.