I’m sure you are probably wondering, what and where exactly is Palau?

Palau is an island country located in the western Pacific Ocean. It is part of the larger island group of Micronesia and is situated approximately 800 kilometers (500 miles) east of the Philippines and about 3,200 kilometers (2,000 miles) south of Tokyo, Japan.

Geographic Context:

Location: Western Pacific Ocean

Region: Micronesia

Nearby Countries: East of the Philippines, southeast of Guam, northeast of Indonesia

Palau consists of more than 340 islands, with its most populous island being Koror. The capital city, Ngerulmud, is located on the island of Babeldaob. Palau is known for its pristine marine environment, rich biodiversity, and as a popular destination for diving enthusiasts.

As Palau is a small island nation, it has the benefit of trying new things and moving quickly. One such project is the Palau Digital ID.

Before I get into why I am obtaining the Palau Digital ID, I want to give a brief overview of the process and benefits of having it.

The Palau Digital ID, available at RNS.ID, offers a seamless process and numerous benefits for global citizens.

Process:

1. Application: Submit your application online via the RNS.ID app.

2. Verification: Complete identity verification with required documents and a selfie.

3. Approval: Receive your digital ID, securely stored in the app.

4. Costs:

1-Year ID: $248

5-Year ID: $1,039

10-Year ID: $2,039

Benefits:

1. Global Recognition: Recognized internationally, providing a trusted form of identification.

2. Privacy and Security: Enhanced security features protect personal data.

3. Access to Services: Use for online services, digital signatures, and identity verification.

4. No Personal Income Tax: Enjoy financial benefits such as no personal income tax.

5. Cryptocurrency-Friendly: Leverage your ID for cryptocurrency activities and blockchain-related services.

For me, the biggest benefit is no personal income tax because, as I plan to spend at least 330 days per year outside the US, it gives me the biggest tax advantage.

As a U.S. citizen, spending at least 330 days outside the US makes you eligible for the Foreign Earned Income Exclusion, which means you can make up to $126,500 tax-free.

The Palau ID is appealing because it gives you easy access to a tax-free residency.

Before they launched this Digital ID, Dubai was the default destination to acquire a tax-free residency. Dubai is still a great option because, although you have to spend at least 1 day per year there, you can catch a direct flight from Dubai to almost every part of the world, so it’s not a huge inconvenience.

However, Palau simply removed the 1-day requirement, so not only can the whole process be done online, but you never have to be there physically to access all of the benefits.

As I am a huge fan of SE Asia, actually living there for 3-4 months per year is definitely an option.

I am building my global citizen portfolio based on the Five Flag Theory. Within the Five Flag Theory, Palau will be my legal residence with zero personal income tax instead of Dubai, which I may still add at a later stage.