PALAU TAX INCENTIVES TO PROMOTE BABELDAOB DEVELOPMENT

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Bill encourages use of Development Bank financing

By Bernadette H. Carreon

KOROR, Palau (Palau Horizon, May 27, 2009) – Melekeok Delegate Lentcer Basilius proposed a measure which will establish a tax incentive for National Development Bank of Palau financed projects in Babeldaob.

The bill which will give tax incentives to the commercial development on Babeldaob passed on first reading.

"In order to encourage these parties to use the National Development Bank as a source of financing for these projects, the Olbiil Era Kelulau finds that a tax incentive should be established, as developing Babeldaob will be beneficial to the Republic as a whole, " the bill said.

Eligible for the tax incentives are loans may by the bank to individuals or organizations in developmental projects such as ; retail shopping buildings, office buildings, industrial spaces and warehouse projects, hospitality projects (including resorts, hotels, motels, and restaurants), gas stations, golf courses and other sports facilities, multi-family housing of five units or more, and healthcare facilities.

For a period of five years from the date of loan origination, the amount of interest paid on an Eligible Babeldaob Development Loan to the National Development Bank of Palau shall be subtracted from the Gross Revenue of the borrower of such Eligible Babeldaob Development Loan prior to assessing the tax .

From and after the sixth year following loan origination, the amount of interest paid on an Eligible Babeldaob Development Loan to the National Development Bank of Palau shall be shall be included in the Gross Revenue of the borrower of such Eligible Babeldaob Development Loan prior to assessing the tax.

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