Two-thirds of the Palauans employed in Palau are earning $15,000 a year or less, according to Elway Ikeda, Director of the Bureau of Revenue and Taxation.
Based on the 2021 Statistical report on the Palau labor force, the two-thirds translates to over 3,000 people earning $15k or below.
Under the new tax law that takes effect on January 1st, 2023, these 3,000-plus individuals will be eligible to receive 10% of their annual earnings back as part of the tax measure to relieve low to middle-income Palauans from the increases in costs of goods and services as a result of the new tax.
“These were the intentions of the Olbiil era Kelulau – House and Senate, to help those in the informal sector and the weak and struggling to manage price increases under the new system,” explained President Surangel Whipps at this week’s press conference.
Benefits under the new tax law include a 10% tax refund to Palauan citizens employed and earning $15k or less. The person earning $15k or less can also get $100 per child that he or she is raising. Palauan citizens who participate in the informal sector (makit) can get up to $600 a year of social assistance from the government if they file sales reports and apply for social assistance.
According to Republic-of-Palau-Economic-and-Fiscal-Update-2022, household income was projected to decline by 20% and will slowly rebound by 2025.
The benefits under the new tax law are said to help boost the incomes of those suffering while Palau continues its recovery efforts.
The tax refunds and social assistance under the new tax regime apply to Palauan citizens only. (By: L.N. Reklai)