Palau

Starting a Business in

Palau

Listed below is a detailed summary of the bureaucratic and legal hurdles an entrepreneur must overcome in order to incorporate and register a new firm, along with their associated time and set-up costs.  It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income (GNI).

The information appearing on this page was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 183 economies. The most recent round of data collection for the project was completed in June 2011.

  • Standardized Company

  • Legal Form: Private Limited Liability Company
  • City: Koror

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No. Procedure Time to Complete Associated Costs
1 Deposit the legally required capital in a bank and obtain deposit evidence

Under the Money Laundering and Proceeds of Crime Act of 2001, a corporate bank account cannot be opened until incorporation documents are issued. Accordingly, the incorporator must first either open an account in his name or deposit the initial capital in the trust account of his attorney for the corporation. Incorporators must obtain proof of payment in the form of a bank statement, receipt, or other documentation of the amount paid into the company as paid-in capital.
1 day no charge
2 Check the uniqueness of the proposed company name and reserve a name

The uniqueness of the proposed company name can be checked over the phone. The Corporate Registrar at the Office of the Attorney General searches the name index. In practice, few incorporators search for a company name before incorporating. Because Palau has no trademark statute, there are limited avenues for enforcement.
1 day no charge
3 Notarize the company deeds

Section 2.1 of the Corporations Regulations for the Republic of Palau requires that “any number of persons not less than three desiring to form a corporation shall execute articles of incorporation and acknowledge the same before a Clerk of the Supreme Court of the Republic or a notary public.” Attorneys generally prepare the incorporation documents. If professional services are used, this adds USD 1,000 to the process.

The articles of incorporation must contain (a) the company name; (b) place; (c) purpose; (d) shares; (e) directors; (f) duration; (g) incorporators; (h) voting; (i) disposition; (j) liquidation; (k) amendments; (l) ownership, and (m) foreign ownership.

A shareholder affidavit must be notarized and set forth the following: (a) the number of authorized shares of each class; (b) the par value of the shares; (c) the names of subscribers for shares of each class; (d) the number of shares of each class subscribed to by each subscriber; and (e) the subscription price or prices for the shares of each class subscribed.
1 day USD 10
4 Pay the registration fee at the National Treasury


1 day USD 250
5 Register the company with the Corporate Registrar at the Office of the Attorney General; obtain a certificate of incorporation

The time between when the company submits the documents to the Corporate Registrar to when the Office of the President issues the charter is about 2 weeks. This time varies, however, depending on (a) how long charter issuance takes once the OCR approves the documents; (b) if there are errors in the corporate documents; and if so, (c) the time required to correct any errors.
14 days included in previous procedure
6 Register employees for social security and obtain an employer identification number (EIN)

Companies must register with the Office of Social Security for payment of social security tax withheld from employees. All employers or self-employed persons doing business in Palau must apply for an employer identification number (EIN) from the Social Security Administration. The applicant completes the Application for Employer Number form and pays the applicable fee (USD 15 for first-time employers, USD 10 for renewing employers). The Palau Social Security Administration will assign the applicant an employer identification number (EIN), which must be entered on the employer's quarterly tax returns. The EIN is required to apply for a business license from the Division of Revenue and Taxation.
1 day USD 15
7 Apply for a business license from the relevant licensing authority

Before a person or a firm engages in business, they must apply for a business license from the Division of Revenue and Taxation, State Government. Previously, companies were licensed by entity, but starting in 2007, companies must obtain a license for each establishment (store).
5 days USD 50
8 Apply for a business license from the state government

The Koror state government requires a state business license. The following license fees apply:
- USD 50: For each retail store (Class A), movie theater, building contractor, furniture manufacturer, and boat building and repair shop association or corporation.
- USD 40: For each scrap-metal-collecting business.
- USD 30: For each retail store (Class B) and each nonassociated or nonincorporated boat building and repair shop.

Other classes and their respective fees apply to other businesses
3-5 days USD 50, depending on numbers and types of licenses
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