An Act to amend Section 1405 of Title 40 of the Palau National Code to restructure the cost, duration of validity, and classification of vessels for the tax assessed for foreign owned private yachts and cruise ships entering the Republic, and for other related purposes (RPPL NO. 10-38)

Tommy E. Remengesau, Jr. JgMBiduw June 12, 2019 Serial No. 19-1 103 Republic <>f Palau Office of die 'O'resfilent The Honorable Hokkons Baules President of the Senate Tenth Olbiil Era Kelulau Ngerulmud, Palau National Capitol Subject: Signing Statement for SB 10-23, HD2, PDl Dear President Baules: P.O. Box 6051, Palau, PW 96940 Tel. (680) 767-2403/2828 Fax. (680) 767-2424/ 1662 Email: rop, presiden~alaunet.com I am proud to sign into law SB 10-23, HD2, PDl , a bill that will increase the fee charged to foreign yacht owners and cruise ships entering Palauan waters. This new law will align Palau's tax structure with the normative market rate and ensure that we receive our fair share from those profiting off Palau's natural beauty. I also want to express my appreciation for your consideration of my suggested amendments to the bill. With the adoption of these amendments, high-end investors and high-value visitors with yachts in Palau will not be forced to leave after 90 days, but instead, consistent with our national strategy, can prolong their stay and contributions to Palau's economy. While this change does not only create a practical revenue stream from the yacht fees, it will also help our environmental goal of keeping Palau a Pristine Paradise by reducing the number of vessels that take advantage of the low fees to park foreign vessels in the Republic without providing Palau with commensurate benefits in return. Your adoption of my proposed amendments also ensures that there will be appropriate regulations and enforcement of this new law so that Palau will receive the law' s intended benefits. Thank you for your leadership in passing this bill and helping to ensure that Palau will be able to be more appropriately compensated for the use of its national waters. Sincerely, p Tommy E. Remengesau, Jr. gJ~ June 12, 2019 Serial No. 19-1103 Republic of Palau Office oi tne <:Pres.7'ent The Honorable Sabino Anastacio Speaker of the House of Delegates Tenth Olbiil Era Kelulau Ngerulmud, Palau National Capitol Subject: Signing Statement for SB 10-23, HD2, PDl Dear Speaker Anastacio: P.O. Box 6051, Palau, PW 96940 Tel. (680) 767-2403/2828 Fax. (6801 767-2424/ 1662 Email: rop.prellident@pa.launet.com I am proud to sign into law SB 10-23, HD2, PD 1, a bill that will increase the fee charged to foreign yacht owners and cruise ships entering Palauan waters. This new law will align Palau's tax structure with the normative market rate and ensure that we receive our fair share from those profiting off Palau's natural beauty. I also want to express my appreciation for your consideration of my suggested amendments to the bill. With the adoption of these amendments, high-end investors and high-value visitors with yachts in Palau will not be forced to leave after 90 days, but instead, consistent with our national strategy, can prolong their stay and contributions to Palau's economy. While this change does not only create a practical revenue stream from the yacht fees, it will also help our environmental goal of keeping Palau a Pristine Paradise by reducing the number of vessels that take advantage of the low fees to park foreign vessels in the Republic without providing Palau with commensurate benefits in return. Your adoption of my proposed amendments also ensures that there will be appropriate regulations and enforcement of this new law so that Palau will receive the law's intended benefits. Thank you for your leadership in passing this bill and helping to ensure that Palau will be able to be more appropriately compensated for the use of its national waters. Sincerely, -'\ /J ~-:#~ To~~u, J-----r. Presidev thepp~blic of The Senate TENTH OLBIIL ERA KELULAU P.O. Box 8, Ngerulmud Republic of Palau 96939 RPPL NO. 1 0 - 3 8 First Regular Session ::; January 2017 INTRODUCED AS SENATE BILL NO. 1 0 - 2...:....3-=--, HD 2-=--, P D l AN ACT SEE TITLE INSIDE INTRODUCED BY SENATOR (S) Regis Akitaya, Rukebai K. Inabo, J. Uduch Sengebau Senior, Mason N. Whipps, Stevenson J. Kuartei, Frank Kyota, Camsek E. Cb.in. and ET,AL., John B. Skebong DATE INTRODUCED February 14, 2017 SENATE ACTION FIRST READING: REFERRED TO: STANDING COMMITTEE REPORT NO.: DATE ADOPTED: SECOND READING: LEGAL FORMAT: REVIEW: TIDRD READING: FINAL READING: February 14, 2017 Ways and Means and Financial Matters 10-21 April 6, 2017 April 6, 2017 Proper April 7, 2017 April 11, 2017 June 11, 2019 HOUSE ACTION FIRST READING: REFERRED TO: STANDING COMMITTEE REPORT NO.: DATE ADOPTED: SECOND READING: LEGAL FORMAT: REVIEW: TIDRD READING: FINAL READING: April 18, 2017 Energy, Communication and Transportation 10-31 July 28, 2017 July 28, 2017 Proper July 31, 2017 March 22, 2018 June 11,. 2019 CONFERENCE COMMITTEE ACTION DATE: COMMITTEE REPORT NO.: DATE PASSED: FINAL READING: CLERK OF THE SENATE None None None None CLERK, HOUSE OF DELEGATES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 TENTH OLBIIL ERA KELULAU First Regular Session, January 2017 RPPL No. ----------10 - 38 (Passed as Senate Bill No. 10-23, HD2, PDl) AN ACT To amend Section 1405 of Title 40 of the Palau National Code to restructure the cost, duration of validity, and classifications of vessels for the tax assessed to foreign owned private yachts and cruise ships entering the Republic, and for other related purposes. THE PEOPLE OF PALAU REPRESENTED IN THE OLBIIL ERA KELULAU DO ENACT AS FOLLOWS: Section 1. Legislative Findings. The Olbiil Era Kelulau finds that there are many foreign owned yachts entering the Republic and many of these vessels are available for charter and charge as much as two hundred and fifty thousand dollars ($250,000.00) per week. If the operators of these yachts are profiting from Palau's natural beauty, the Republic should take part in a portion of those profits. The Olbiil Era Kelulau also finds that other islands also known for their natural beauty are charging much higher entry fees for foreign water vessels; for example, the Marshall Islands charge $230 per day, Guam charges $7 per day, and the Bahamas charge $150 for vessels up to 30 feet and $300 for vessels over 30 feet. In order to become a high­ end tourism destination, the Republic of Palau must charge fees similar to these other nations to attract high-end tourists and to leverage revenues that can be used to improve the Republic's infrastructure so that it can support such tourism. Section 2. Amendment. Section 1405 of Title 40 of the Palau National Code is hereby amended as follows: "§ 1405. Foreign water vessel tax. (a) Definitions. In this section: (1) "Cruise ship" means a passenger ship used for pleasure voyages, where the voyage itself and the ship's amenities are a part of the experience, as well as the different destinations, or ports of call, along the way. (2) "Liveaboard" means a commercially operated boat that provides an inclusive dive program for paying customers with lodging and meal services aboard the boat. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RPPL No. 10 - 38 (Passed as Senate Bill No.10-23, HD2, PDl) (3) "Private yacht" means any yacht not for hire and not engaged in trade or commerce but which operates for private use, pleasure, or recreational purposes. (4) "Water vessel" means every description of watercraft owned or operated by a nonresident and used or capable of being used as a means of transportation on water or to be leased or sold in the Republic. (b) There is hereby assessed and levied a tax to be paid for every water vessel that qualifies as a private yacht or cruise ship entering the territorial waters of the Republic and not expressly excluded by this section. Water vessels lawfully operating as common carriers are exempted from levy, assessment and payment of the tax imposed under this section. Liveaboards and traditionally built private yachts, as defined in regulations promulgated by the Ministry of Public Infrastructure, Industries, and Commerce, are exempted from levy, assessment and payment of the tax imposed under this section. (c) All water vessels that are classified as private yachts or cruise ships and not expressly exempt by this section shall pay an initial entry tax to remain in the Republic for up to thirty days, and must pay a renewal sum to remain in the Republic for each additional thirty day period. Subject to relevant exceptions under law or regulation, unless the owner of a private yacht or cruise ship is a business owner in the Republic of Palau, or has otherwise paid a fee to the Bureau of Customs and Border Protection as set forth in regulations promulgated by the Ministry of Public Infrastructure, Industries, and Commerce, no private yacht or cruise ship shall remain in the Republic longer than 90 days. The following tiered tax system is based on the length of the water vessel and applicable to all private yachts and cruise ships not expressly excluded by this section: (1) vessels below 40 feet in length shall pay an initial tax of $250 for a visit lasting thirty days or less, the cost of first renewal shall be $1,000 and a second renewal shall be $2,000. Page 2 of 3 ✓ 1 2 3 4 5 6 7 8 9 11 12 13 14 15 16 17 18 19 20 21 RPPL No. 10 - 38 (Passed as Senate Bill No. 10-23, HD2, PDl) (2) private yachts 40 feet or more, but less than 90 feet in length shall pay an initial tax of $500 for a visit lasting thirty days or less, the cost of first renewal shall be $1,000 and a second renewal shall be $2,000. (3) private yachts 90 feet or more, but less than 150 feet in length shall pay an initial tax of $750 for a visit lasting thirty days or less, the cost of first renewal shall be $500 and a second renewal shall be $250. ( 4) private yachts 150 feet or more in length shall pay an initial tax of $1000 for a visit lasting thirty days or less, the cost of first renewal shall be $500 and a second renewal shall be $250. (d) The tax structure of subsection (c) shall be incrementally implemented as follows: for the first year following the effective date of this Act, the Republic shall assess 50% of the tax amounts; for the second year following the effective date of this Act, the Republic shall assess 75% of the tax amounts; for the third year following the effective date of this Act and every year thereafter, the Republic shall assess the full tax amount. (e) The Ministry of Public Infrastructure, Industries, and Commerce shall promulgate regulations necessary to enforce the provisions of this Section, and shall also be responsible for enforcing the provisions of this Section." Section 3. Effective date. This Act shall take effect ninety days after either approval by the President of the Republic of Palau or its becoming law without such approval. PASSED: June 11, 2019 Approved this~ of ---;;Fr-----' 2019. Page 3 of3