By: L.N. Reklai

February 8, 2017 (Koror, Palau) “It concerns me that many business operators are using apartments as hotel accommodations in lieu of paying the 10% hotel room tax.  This is illegal and anyone with information regarding this activity is urged to report them,” stated President Remengesau at a press conference last week.


Pushing a policy direction toward high-value tourism, President Remengesau has directed all agencies including Ministry of Tourism, Ministry of Finance  and Palau Visitors Authority to work in partnership to stop activities that are selling Palau as “cheap-package” destination.

In line with this policy, Bureau of Revenue and Taxation is putting efforts into investigating and notifying businesses that are using apartments and houses as forms of housing accommodation in order to avoid payment of hotel room tax.

This does not include homes registered to serve as bed and breakfast accommodation or homestays.  This refers to apartments or homes that have been converted to accommodate visitors or tourists but are not registered as such, in order to avoid the law charging 10% for visitor accommodation.

“These practices are invasive to our economic structure.  If they continue, legitimate businesses will surely suffer losses of revenue that will have direct negative impact to our economy in the long run. Everyone operating hotels in Palau and providing accommodations to visitors must pay the proper taxes.  This tax loop-hole gimmick is becoming widely performed by cheap package tour operators and must be addressed and ceased immediately,” declared Remengesau. [/restrict]