The president said in his letter to the Olbiil Era Kelulau leaders that it is proposing changes to the bill and one of them is that the bill should be applicable to all new corporations in Palau.
The president said that Senate Bill No. 8-22, SD1, HD1 is a very difficult measure to understand.“The bill is unclear on many respects,” Toribiong said.He said the most objectionable provisions of the bill are the sections that create a new bureaucracy to administer the provisions of the bill and authorizing and appropriating $100,000 to pay for the bureaucracy.“I am not sure what more I can say to impress upon the Olbiil Era Kelulau that our local revenues are in severe downward spiral and are projected to be in the condition for the foreseeable future. Without cutting the budget of an existing government program,” Toribiong said.He added that the country do not have the money to fund a new bureaucracy nor there is a new for another one.The measure puts in place a mechanism a system in filing of incorporations.The measure also puts in fees regarding the filing of documents.“ I will not sign any bill creating an unnecessary new bureaucracy and appropriating moneys to pay for it. I strongly suggest that this bill be amended to place the responsibility for administering the provisions of this bill under the existing Office of the Registrar,” Toribiong said.He said that the revenues anticipated from the bill are “overblown and unrealistic.”The president also noted that the fee of $10,000 to file its article of incorporations is also not favorable.“Any person can go online right now and incorporate a corporation in several different jurisdictions throughout the world with similar or even more favorable corporations laws, and do so at much less expense,” he stated.He said in the British Virgin Islands for less than $1,500 while in Singapore it only cost $1,250.“If this bill is intended to be a revenue generating measure, in my opinion , it is mistaken in its assumptions. There is already a great deal of competition by countries with long established corporation regimes for the type of business this bills intend to attract. Palau is very late for the game, so to speak,” he stated.He said that the fee will discourage investors because the fee is excessive.The president suggests a fee of not more than $500 instead.He said if Palau wants to attract investors it has to offer them tax incentives.The president recommended that the bill should also apply to all corporations and that the required initial capitalization instead of $100,000 should be lowered to the existing $1,000.The president noted that the only way Palau can realize any significant revenue from any corporation is to have it establish a presence here.“Business generates income, which in turn generates taxes. Corporations will not pay Palau fees or taxes simply for the privilege of saying that they are incorporated here. To think otherwise is unfounded,” Toribiong noted.
