By: Bernadette Carreon
President Tommy Remengesau Jr. said Palau is not a tax haven, downplaying European Union naming Palau in its blacklist.
Remengesau said Palau has instituted changes in its bank laws and has put in place laws that are in accordance with international standards. [restrict]
The president however admits that there is still a need for Palau to update its tax laws.
“ Not having the relevant laws in place doesn’t make us a tax haven. Palau doesn’t have the sophistication or has in place the laws, but the fact is that no one is avoiding taxes at home by coming to put their money in a bank in Palau,” Remengesau said.
The president said there are only five banks that are licensed to operate in Palau but three of these banks are U.S. FDIC registered banks.
“So that means that the banks are also under the watchful eye of the U.S banking regulators so definitely there’s a safeguard,” he noted.
While the two banks conduct their operations under the watchful eye of the Financial Institution Commission (FIC).
Remengesau said compared to the other countries in the blacklist which have between 200 to 300 banks operating in their economy, Palau is unique.
“But we do need to update our laws and that our effort focused in that area. And we have come a long way in correcting the problem, at one point Palau had about 12 to 15 banks in operation,” Remengesau said.
But since Palau has instituted safeguards, there are only five banks in operation.
“Laws that have been put in place has resulted in the reduction of the banks,” he stated.
Remengesau however said that it would clarify its situation with the EU .
Finance Minister Elbudechel Sadang said EU has not sent Palau any formal communications on its decision to put the country in their blacklist.
The EU has named and shamed 17 countries, which includes South Korea, Mongolia, Namibia, Panama, Trinidad & Tobago, Bahrain and the United Arab Emirates.
Guam, the US territory in the Pacific, also features on the blacklist, so are American Samoa, Barbados, Grenada, Macau, the Marshall Islands, St Lucia, Samoa and Tunisia.
The blacklist will be linked to EU legislation so that jurisdictions implicated will not be eligible for funds from the bloc except where it is to aid development. [/restrict]