Capital Gains Tax in Palau

Palau does not have a separate capital gains tax regime. Capital gains are treated as ordinary income and taxed under the personal income tax or gross revenue tax system.

Scope of Capital Gains Tax

There is no separate capital gains tax in Palau. Gains from the sale of assets are generally treated as ordinary income for both individuals and corporations. They are integrated into the regular tax framework.

Capital Gains for Individuals

Real Estate Gains

Gains from the sale of real estate are subject to tax at the flat PIT rate of 9.5% (above the $10,000 threshold). The gain is included in the individual's annual income and taxed accordingly.

Securities Gains

Gains from the sale of securities are generally taxed as ordinary income for individual investors who trade regularly.

Capital Gains for Corporations

Corporate capital gains are treated as gross revenue and subject to the 4% GRT. Since GRT is based on gross revenue rather than net gain, the full sale proceeds are included in gross revenue.

Exemptions and Reliefs

Calculation of Gains

The capital gain is calculated as the difference between the sale price and the acquisition cost, adjusted for:

Filing and Payment

Individuals must declare capital gains in their annual tax return. Payment of tax due must be made by the filing deadline. Corporations report capital gains as part of their gross revenue for GRT purposes.

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