House Bill No. 7-210-15 stated that there are currently eight businesses licensed to provide remittance services to consumers down from 11 businesses licensed for such purpose in 2007.
Isechal said that the Tax Task Force of 2007 recommended establishing a remittance tax and estimated that over $14 million is remitted from Palau each year and that if Palau were to institute a four percent remittance tax on these transmitted funds.
From this the Republic could generate $591,072 each year from these businesses in addition to the amount it collects in license fees and gross revenue taxes.
He said that imposing a tax on remittances is a new source of revenue.
“This will not impact majority of the citizens of the republic,” Isechal said.
He said that in addition to revenue source, the proposed measure will ensure the safe and secure operation of money transmission businesses.
The bill stated that the remittance tax will ensure protection of consumers utilizing these services and to prevent the use of these businesses for criminal purposes.
The bill, will also promote confidence in Palau’s financial institutions and economy and demonstrate that it is safe to do business in the country.
Palau collects $50 from each company’s in license fees and additional four percent of each company’s gross revenue in taxes totaling just over $271,000 in 2007.
The government collected $64,559 in the first quarter of 2008.
