Business Structures in Palau

Palau offers several business entity types for local and foreign investors. This guide provides a detailed overview of each structure, registration requirements, and tax implications.

Available Business Structures

Limited Liability Company (LLC)

The LLC is a popular choice for small to medium-sized enterprises in Palau.

• Minimum Members: 1
• Management: Member-managed or manager-managed
• Liability: Limited to investment
• Tax: Subject to GRT at 4% on gross revenue above $500K

Corporation

Suitable for larger enterprises and businesses seeking outside investment.

• Minimum Shareholders: 1
• Directors: Minimum 1
• Audit Requirements: May be required for larger companies
• Tax: Subject to GRT at 4% on gross revenue above $500K

Branch of a Foreign Company

Foreign companies may establish a branch in Palau.

• Registration: Foreign company registration certificate required
• Local Representative: Must appoint a local agent
• Liability: Branch is not a separate legal entity
• Tax: Subject to GRT on Palau-source gross revenue

Sole Proprietorship

The simplest business structure for individual entrepreneurs.

• Registration: Simple registration with business license office
• Liability: Unlimited personal liability
• Tax: Income taxed at PIT rate of 9.5% (above $10,000)

Partnership

General and limited partnerships are available:

• General Partnership: Partners have unlimited liability
• Limited Partnership: Limited partners have liability capped to investment
• Tax: Partners taxed individually at their applicable rates

Tax Comparison by Structure

Choosing the Right Structure

Factors to consider when selecting a business structure include liability protection, tax implications, ownership flexibility, and compliance requirements. Consulting with a local business advisor is recommended.