Palau has joined the Global Forum on Transparency and Exchange of Information for Tax Purposes.
It is the 160th member state of the multi-lateral body, which operates under the auspices of the Organisation for Economic Co-operation and Development.
Members commit to combating tax evasion through implementing internationally agreed standards of transparency and information exchange.
In October, the European Union agreed to move Palau from its black list of tax havens to a so called 'grey list' after it committed to reforms.