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Uldarico Maria Rodrigues National Director Domestic Tax Directorate General of Revenue & Customs Ministry of Finance PowerPoint Presentation
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Taxation in Timor Leste Selected policy options for reducing compliance costs and providing incentives for small businesses in the standard regime. Uldarico Maria Rodrigues National Director Domestic Tax Directorate General of Revenue & Customs Ministry of Finance

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Taxation in Timor LesteSelected policy options for reducing compliance costs and providing incentives for small businesses in the standard regime.

Uldarico Maria Rodrigues

National Director Domestic Tax

Directorate General of Revenue & Customs

Ministry of Finance

Democratic Republic of Timor Leste

key facts
KEY FACTS

Population: 1.05 million (2007)

Income per person: $460 (non-oil GDP)

Religion: Roman Catholic

Official Languages: Portuguese and Tetum

Official Currency: US Dollar

Land Area: 14,900 sq. kms

Form of Governance: Parliamentary Democracy

Major Exports: Petroleum, Coffee, Candlenut; Potential for vanilla and cattle exports

timor leste tax regime
TIMOR LESTE TAX REGIME
  • System of Self
  • Assessment
  • Requires Voluntary
  • Compliance
domestic tax law
DOMESTIC TAX LAW

Originally based on Indonesian Law on

Income Tax, modified by:

- UNTAET Regulation 2000/18

- UNTAET Directive 2001/2

UNTAET Directive 2001/2 has now been repealed and UNTAET Regulation 2000/18 has been partially repealed as a result of Phase 1 of tax reform

domestic tax law cont
DOMESTIC TAX LAW (cont.)

Tax laws are currently being amended.

Phase 1 of reform commenced 1 July

2008 when new tax law promulgated

Democratic Republic of

Timor Leste Taxes and Duties Act

(Decree Law 8/2008)

domestic tax law cont1
DOMESTIC TAX LAW (cont.)
  • Tax Procedures and Sanctions Laws are currently being drafted
  • Memorandum of Understanding signed with Portugal to enter into Double Tax Treaty, which will be based on OECD model
tax types
TAX TYPES
  • Revenue Service
  • Income Tax
  • Withholding Tax
  • Wage Income Tax
  • Service Tax
  • Customs Service
  • Import Duty
  • Excise Tax
  • Sales Tax
income tax
Income Tax
  • Income tax is imposed on taxable income in a tax year (01 January – 31 December)

Resident Natural PersonTax Rate

Taxable Income $0 - $6,000 0%

Taxable income in excess of $6,000 10%

Others

All Taxable income 10%

income tax rates comparison
Income Tax Rates - Comparison

OLD

NEW

Resident Natural Person

0 - $6,000 0%

$6,001 and above 10%

Others

All taxable Income 10%

Non-Resident

Without P/E10%

Resident Natural Person

0 - $3,368 10%

$3,369 - $6,737 15%

$6,738 and above 30%

Others

All taxable Income 30%

Non-Resident

Without P/E20%

withholding tax
Withholding Tax

Income received from:-Rate

  • Rent, royalties, prizes and lottery winnings 10%
  • Carrying on building or construction activities* 2%
  • Providing construction consulting services* 4%
  • Providing air or sea transportation services*2.64%
  • Carrying on mining activities/support services*4.5%

* (normally final with no further tax liability)

Gross Income paid to non-resident10%

withholding tax final or further liability
Withholding Tax – final or further liability?

Withholding tax withheld in respect of the following services is final, with no further liability,unlessthe taxpayer makes an irrevocable election to not be final.

  • Carrying on building or construction activities*2%
  • Providing construction consulting services* 4%
  • Providing air or sea transportation services*2.64%
  • Carrying on mining activities/support services*4.5%

If election made then annual tax form lodged, income assessed and credit allowed for withholding tax.

wage income tax
Wage Income Tax
  • Imposed on taxable wages received by employee in respect of employment in Timor Leste

Resident Natural PersonRate

Monthly taxable wages $0 - $500 0%

Monthly taxable wages in excess of $500 10%

Non-Resident Natural Person

All taxable wages 10%

service tax
SERVICE TAX
  • Imposed on Gross Consideration received of $500 or more per month
  • In respect of Designated Services only
  • Tax rate is 5% payable monthly
designated services
DESIGNATED SERVICES
  • Hotel Services
  • Restaurant and Bar Services
  • Telecommunications Services
import duty
IMPORT DUTY
  • Most goods imported into Timor Leste
  • are subject to import duty.
  • Import duty of 2.5% is imposed on the
  • “customs value” of the goods.
  • “customs value” means the fair market
  • value of the goods including cost, insurance
  • and freight.
excise tax
EXCISE TAX
  • Excise tax is imposed on “excisable” goods
  • imported into Timor Leste or manufactured
  • in Timor Leste.
  • The excise value of excisable goods is:
  • For goods imported into Timor-Leste:
      • The customs value of the goods; plus
      • Any import duty imposed on the goods
sales tax
SALES TAX
  • Sales tax is imposed on most goods imported
  • into Timor Leste at a rate of 2.5%:
  • The sales tax value of taxable goods imported
  • into Timor-Leste is:
  • the customs value of the goods, plus
  • any import duty, plus
  • any excise tax payable on the importation of
  • the goods;