Palau is not a tax haven
By: L.N. Reklai
December 8, 2017 (Koror, Palau) Palau is not a tax haven according to Mr. Werner of the Palau’s Financial Investigative Unit (FIU) in an interview yesterday. [restrict]
European Union released a report this week blacklisting 17 non-EU countries of being guilty of providing tax avoidance scheme and named Palau among other Pacific island countries on the list.
“I believe that if EU came to this conclusion that we have offshore structures, they are mistaken. My suspicion is that EU is relying on old reports, when Palau still had old offshore financial institutions act, which was repealed a long time ago,” added Mr. Warner.
There are five banks in Palau and three of them are branches of United States banks that are FDIC and FINCENN regulated institutions. The three banks handle over 98% of all financial transactions in Palau.
“These banks are not tax havens for foreigners. You can’t open an account in Palau unless you have a presence in Palau,” expressed Mr. Warner of FIU.
According to EU, the countries blacklisted have refused to cooperate and change their ways after one year of consultation. No one from Palau side is aware of such consultation taking place this year.
Mr. Werner in an interview said he was not aware of anytime EU ever came to Palau to discuss this. He added, Palau recently had an assessment from Asia-Pacific Group on Money Laundering consisting of 41 countries and there was no discussion in that assessment on off-shore banking issues.
EU uses abroad criteria to establish “non-cooperative jurisdictions” base on tax transparency, fair taxation and implementation of anti-BEPS measures, or tax strategies that allow some countries to shift profits to low or no tax locations where there is little or no economic activity.
Palau repealed the Offshore Banking Act in 2001 and enacted the Financial Institutions Act (FIA)and four anti-money laundering laws. At the time, there were 30 plus active financial institutions in Palau and after enactment of the FIA, only 12 applied for banking license. In September of 2001, 10 of those licenses were revoked. Currently, only five financial institutions are licensed to operate in Palau. [/restrict]