Palau

Palau is a small island nation in the western Pacific comprising over 500 islands, with a population of roughly 18,000. It operates under a Compact of Free Association (COFA) with the United States, granting Palauan citizens the right to live and work in the US and allowing US citizens visa-free entry to Palau. The economy is heavily reliant on tourism — particularly scuba diving and eco-tourism — which accounts for the majority of GDP, supplemented by US financial assistance under the Compact.

Palau uses the US dollar and imposes no corporate income tax on foreign-sourced income, though a gross revenue tax applies locally. It is renowned for its strict environmental protections, including a landmark ban on certain sunscreen chemicals and the Palau National Marine Sanctuary covering 80% of its waters.