Data-center law in Palau

Environmental Quality Protection Act, 24 PNCA secs. 142-143

Applies to both

Section 142(c) requires every national or state government agency to include, in every recommendation or report on proposals for legislation and other major government actions significantly affecting the quality of the human environment, a detailed environmental impact statement addressing the action's environmental impact, unavoidable adverse effects, alternatives, and irreversible commitments of resources.

Section 143(a) and (b) require the responsible official to consult the public and any agency with relevant jurisdiction or expertise before completing the statement, and to make it and the resulting findings available to the Palau Environmental Quality Protection Board and the public.

Section 143(c) separately requires the applicant for any action, whether or not that action itself requires an environmental impact statement, to pay a non-refundable Environmental Impact Fee once all necessary permits to commence the action have been obtained and before construction begins. That fee is assessed on a schedule that rises with estimated construction cost, reaching a rate of 0.15% of the estimated project cost above one million dollars.

Section 143(d) exempts a project financed entirely with national or state government funds, so a privately or jointly financed project, including a data-center's construction, is not exempt.

Source: Full text of law

Foreign Investment Act, 28 PNCA sec. 119 (Tax Credit)

Applies to private

Section 103 requires a non-citizen to obtain a foreign investment approval certificate before becoming an owner or part-owner of, or investing in, a business enterprise in Palau, so a foreign-owned data-center operator must obtain that approval before construction.

Section 119 makes a grantee that constructs a facility in Palau eligible, at the discretion of and subject to regulations of the Ministry of Finance, for a tax credit of up to 40% of the costs of off-site road, electrical power, water, or sewer infrastructure improvements made to service that facility, applied against gross-revenue taxes for the tax year the costs were incurred and available to be carried forward at the Ministry's discretion.

The Act names no sector-specific incentive for a data center or other information-technology facility; the credit is a general facility-construction incentive available to any qualifying grantee.

Source: Full text of law