Minister of Finance Kaleb Udui Jr., Elway Ikeda, Director of Revenue and Taxation and President Surangel Whipps Jr. explaining the new tax law and its implications at Wednesday, press conference.

The new tax law – Palau Goods and Services Tax, will take effect on January 1st, 2023, despite efforts to delay its implementation.

“The petition raises a lot of points…none of them are related,” stated Minister Kaleb Udui Jr. of the Ministry of Finance regarding the petition that sought to delay the implementation of the new tax law.

The petition cited reasons to delay the implementation, saying that the new tax law will exacerbate an already depressed economy that “has not seen growth …and is in recession.”  It added that it would “cause undue hardship to Palauans and residents of the Republic of Palau.”

“We need tax reform…For those people who are businesses, I cannot understand why they would want to delay when they are losing money now. Under the business profits tax, you can defer your taxes for three years if you are losing money now. You can carry forward your losses,” explained Minister Udui of the benefits of the new tax regime.

“Those people who are affected, the ones the government are most concerned about… are those in low and middle income. These people are going to get their money back, so I don’t know why we want to delay that.  I think we should start this as soon as possible.” asserted Udui.

Udui said PGST is a more “efficient and effective” tax system and that some items will have a one-time impact. Still, the efficiency of the system will result in the efficiency of the business and would result in lower prices.

“Some of those arguments in the petition are not relevant to the tax reform,” added Minister Udui.

Those that will bear the weight of the new tax regime are foreign workers and tourists admitted President Whipps Jr., but overall, he said the law “will level the playing field”.

Meanwhile, the public information campaign on the new tax law ramps up. Warnings against price gouging under the guise of the new law are issued and posted publicly.

The House of Delegates Committee on Judiciary, Governmental Affairs & Human Rights wrote to Attorney General Ernestine Rengiil, urging her office to work with the Bureau of Tax & Revenue to prosecute violators of the new tax law, especially those raising prices of goods by putting 10% on top of already taxed items.

“We encourage your office to act within the full scope of its authority to ensure the law is followed and consumers are protected,” stated the authors’ Delegates Noah Kemesong and Lee Otobed.

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