Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

PALAU

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: December 16, 1997.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
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 dollar, which circulates freely.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsn.a.
Payments arrangements
Regional arrangementsPalau participates in PACER and PICTA.
Administration of controlNo.
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 that exceed the equivalent of $10,000 and appear suspicious must be reported under the Money Laundering Act.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedn.r.
Held domesticallyn.r.
Approval requiredn.r.
Held abroadn.r.
Approval requiredn.r.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyn.r.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedNo.
Domestic currency accountsNo.
Blocked accountsNo.
References to legal instruments and hyperlinksn.a.
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 exempt. The tariff for cigarettes is $2 per 20 and the ad valorem tax on tobacco products is 150%. Cosmetics and toiletries are subject to a tariff of 25%; carbonated soft drinks, $0.10 per 12 ounces; beer, $0.03 an ounce; liquor, $0.30 an ounce; wine, $0.20 an ounce; wine coolers, $0.05 an ounce; liquid fuel, $0.05 a gallon; and vehicles, 5% ad valorem plus $250. An ad valorem tax of 25% applies to bottled water.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasYes.
Export taxesExport taxes are levied on fish at $0.25 a kilo.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentUnder the Palau National Code, all foreign investments must be approved by the Foreign Investment Board. Certain categories of investments are not permitted for foreign nationals, except for those who invest jointly with a Palau national.
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.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsSpecific provisions apply only to the Palau National Development Bank—a government-owned bank that is not involved in commercial banking.
Provisions specific to institutional investors
Pension fundsn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
No significant changes occurred in the exchange and trade system.

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