KOROR, Palau — A local business has been fined more than $75,000 by the Bureau of Revenue & Taxation for breaking Palau’s tax laws, after an audit revealed the company failed to properly record and report sales.
According to the Bureau, the taxpayer—registered under the Palau Goods and Services Tax (PGST)—was investigated after a complaint alleged the business did not charge PGST on a transaction. When auditors from the Division of Audit & Compliance requested financial records, the business failed to provide them, violating 40 PNC §1801(d).
Further review uncovered missing receipts and invoices, raising concerns that the business had underreported its sales. As a result, the Bureau extended the audit to cover a 14-month period, finding multiple violations, including:
- Failure to keep proper financial records as required under 40 PNC §§1601 and 1701(e), and
- Submission of tax returns that did not fully report sales.
- The Bureau imposed the maximum penalty allowed by law due to the severity of the violations.
Legal Recordkeeping Required by All Businesses
Under Palauan law, all businesses must keep complete financial records for at least three years. This includes:
- A daily record of cash received, such as sales and payments, with receipts and sales slips kept in order.
- A record of credit sales, listing customer names, invoice numbers, and amounts.
- A record of every payment made by the business, including who was paid, the amount, and why.
- Any other documents requested by the Bureau for review.
- These records must be available at any time if requested by the Bureau.
Fairness Through Compliance
The Bureau stressed that accurate recordkeeping is essential for fairness in the tax system. Businesses that follow the rules help ensure a level playing field for all. The agency encourages the public to report suspected tax violations and emphasized that enforcement helps protect honest taxpayers.
Enforcement Will Continue
Officials say they will continue auditing businesses and taking legal action where needed. Businesses that fail to comply with tax rules risk steep penalties. However, the Bureau also remains committed to helping businesses understand their responsibilities.
For help with tax compliance or recordkeeping, businesses can contact the Bureau of Revenue & Taxation at taxhelp@palaugov.org or call (680) 488-2580, 2465, or 3303. (PR)