Palau
Economy

Palau's economy consists primarily of tourism, subsistence agriculture, and fishing. Tourist activity focuses on scuba diving and snorkeling in the islands' rich marine environment, including its barrier reefs ' walls and World War II wrecks. In April 2022, Palau launched Ol'au Palau, a responsible tourism program aimed to preserve the country's natural environment and traditional culture. The government is the largest employer, relying heavily on US financial assistance. Business and tourist arrivals numbered some 50,000 in fiscal year 2000–2001.

Although Palau's ship registry represents less than 0.001% of the world fleet of commercial ships, it contains almost 60% of last-voyage flags in 2019. It suggests that the registry is used by shipping companies to evade end-of-life responsibilities. These responsibilities entail the decommissioning of a ship in such a way that the environmental impact and labor conditions are in order.

The population enjoys a per capita income twice that of Micronesia as a whole. Long-term prospects for the key tourist sector have been greatly bolstered by the expansion of air travel in the Pacific Rim, the rising prosperity of leading East Asian countries and the willingness of foreigners to finance infrastructure development.

In November 2006, Pacific Saving Bank officially announced bankruptcy. On 13 December 2006, the Palau Horizon reported that 641 depositors had been affected. Among them, 398 held less than US$ 5,000, with the remainder ranging from US$5,000 to US$2 million. On 12 December, 79 affected people received compensation. Toribiong said, "The fund for the payout came from the balance of the Palau government's loan from Taiwan." From a total of US$1 million, which originally was for assisting Palau's development, US$955,000 was left at the time of bankruptcy. Toribiong requested the Taiwanese government use the balance to repay its loans. Taiwan agreed to the request. The compensation would include those who held less than US$4,000 in an account.

The income tax has three brackets with progressive rates of 9.3 percent, 15 percent, and 19.6 percent respectively. Corporate tax is four percent, and the Palau Goods and Services Tax was introduced on 1 January 2023. It is a broad-based tax of 10%, applied to most goods and services and other items sold or consumed in Palau. There are no property taxes.

Major tourist draws in Palau include Rock Islands Southern Lagoon, a UNESCO World Heritage Site, and four tentative UNESCO sites, namely, Ouballang ra Ngebedech (Ngebedech Terraces), Imeong Conservation Area, Yapease Quarry Sites, and Tet el Bad (Stone Coffin).
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