Tax Aspects of H.j. Res. 626 (compact of Free Association with the Government of Palau)

Joint Committee on Taxation (1986-09-10). Tax Aspects of H.j. Res. 626 (compact of Free Association with the Government of Palau) (Report). Washington, DC: Joint Committee on Taxation.

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Abstract: The following is background information and staff analysis concerning the tax provisions of the proposed Compact of Free Association with the Government of Palau (H.J. Res. 626). These tax provisions are equivalent in all relevant respects to those that Congress adopted for the Federated States of Micronesia and the Marshall Islands in 1985 (H.J. Res. 187, as amended, Public Law 99-239). Congress adopted those tax rules for Micronesia and the Marshalls only after significantly limiting the tax benefits originally proposed to Congress for those areas...

Pursuant to section 103(e) of the proposed Compact, one year after the date of enactment of the Joint Resolution approving the Compact of Free Association between the United States and Palau, and annually thereafter, the President is to report to Congress with respect to the impact of the Compact on the possessions of the United States and on the State of Hawaii. Any such report is to identify any adverse consequences resulting from the Compact and is to make recommendations for corrective action to eliminate any such consequence. Among the matters to which the reports are to pay particular attention is taxation. This provision of the Palau Compact corresponds roughly to the provision of Public Law 99-239, governing the U.S. relationship with Micronesia and the Marshall Islands, which requires a study of the tax effects of that Compact to be submitted to the Committee on Ways and Means of the House and the Committee on Finance of the Senate before October 1, 1987.