Palau confirms GST obligations for non-resident suppliers of digital services

28 April 2023

From 1 January 2023, Palau introduced Goods and Service Tax, and recently the Palau tax authorities confirmed that this new tax will also apply to non-resident suppliers of electronic services who sell to consumers in the region.

The new tax charged at a rate of 10% will require foreign providers of electronic services to register for VAT if they exceed an annual registration threshold of $300,000 (approx. £240,000), and it’s hoped that by introducing this new requirement, it will remove the unfair advantage that not charging VAT gives to non-resident companies over resident providers.

This tax will apply to a range of electronic services, including streaming games, music, apps, films, e-books, e-journals, software, and internet services.