Palau National Telecommunications Corporation (PNCC) will be exempted from paying the 15% universal service tax to the government according to House bill 10-116-11,HD1, SD1 passed on its 3rd reading during Senate’s Special Session yesterday.
The bill amends The PNCC Act of 2017 by exempting PNCC from universal access levy and extending moratorium of new telecom business from 2023 to 2030, which includes moratorium on issuance of new telecommunication and radio frequency licenses.
Under the Act, all telecom providers pay 15% of their gross revenue to the government as universal service levy. The universal service tax under the law pays for the RUS loan or debt payments of completed universal access projects, pay for satellite or other back up options in case of submarine cable outage, and pay for new universal access projects.
Currently, PNCC pays its debt to RUS from its 15% tax and the balance is remitted to the government. The two other telecom companies also pay the 15% tax to the national government.
According to Minister Charles Obichang of MPIIC, they agreed to let PNCC pay the loan directly to RUS due to its established payment process with RUS. The balance remaining after the loan payment is remitted to the government.
The amendment will exempt PNCC from paying the universal access tax until the RUS/REA loan is paid off. PNCC will not be remitting the difference to the government anymore until the loan is paid off.
The bill findings cite the need to protect PNCC and other established local telecom companies from competition contrary to Palau’s ICT policy. The findings also state that PNCC has been making payments directly to RUS for its loan and therefore, should be exempted until its RUS/REA loan is paid off.

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