Chapter

PALAU

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of December 31, 2003)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: December 16, 1997.
Exchange Arrangement
CurrencyThe currency of Palau is the U.S. dollar.
Exchange rate structureUnitary.
Classification
Exchange arrangement with no separate legal tenderThe currency of Palau is the U.S. dollar, which circulates freely.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsn.a.
Payments arrangements
Regional arrangementsPalau participates in PACER and PICTA.
Administration of controlNo.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo restrictions apply on exports or imports of banknotes; however, transactions exceeding the equivalent of $10,000 must be reported under the Money Laundering Act of 2001.
Resident Accounts
Foreign exchange accounts permittedn.r.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.r.
Nonresident Accounts
Foreign exchange accounts permittedNo.
Domestic currency accountsNo.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listThe importation of controlled substances, guns, ammunition, nonquarantined fruits, live plants, and animals is restricted.
Import taxes and/or tariffsThe tariff for general imports is 3%; government, personal, medical, and food imports are exempted. Effective July 3, 2003, the tariff for cigarettes was increased to $2 per 20 from $0.50 per 20 and the ad valorem tax on tobacco products was increased to 150% from 100%. Cosmetics and toiletries are subject to a tariff of 25%; carbonated soft drinks, $0.10 per 12 ounces; beer, $0.03 per ounce; liquor, $0.30 per ounce; wine, $0.20 per ounce; wine coolers, $0.05 per ounce; liquid fuel, $0.05 per gallon; and vehicles, 5% ad valorem plus $250. On September 12, 2003, an ad valorem tax of 25% was imposed on bottled water.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasYes.
Export taxesExport taxes are levied on fish at $0.25 per kilo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentThe Palau National Code restricts foreign direct investment without local ownership.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsAccording to the constitution, only citizens of Palau and corporations wholly owned by citizens of Palau may acquire title to land or waters in Palau.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutionsSpecific provisions apply only to the Palau National Development Bank, which is not involved in commercial banking.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsNo.
Changes During 2003
Imports and import paymentsJuly 3. The tariff for cigarettes was increased to $2 per 20 from $0.50 per 20.
July 3. The ad valorem tax on tobacco products was increased to 150% from 100%.
September 12. An ad valorem tax of 25% was imposed on bottled water.

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