Presentation on theme: "Uldarico Maria Rodrigues National Director Domestic Tax Directorate General of Revenue & Customs Ministry of Finance Democratic Republic of Timor Leste."— Presentation transcript:
Uldarico Maria Rodrigues National Director Domestic Tax Directorate General of Revenue & Customs Ministry of Finance Democratic Republic of Timor Leste Taxation in Timor Leste Selected policy options for reducing compliance costs and providing incentives for small businesses in the standard regime.
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 System of Self Assessment Requires Voluntary Compliance
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on Income Tax, modified by: - UNTAET Regulation 2000/18 - UNTAET Directive 2001/2 UNTAET Directive 2001/2 has now been repealed and UNTAET Regulation 2000/18 has been partially repealed as a result of Phase 1 of tax reform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.) 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 (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 Revenue Service Income Tax Withholding Tax Wage Income Tax Service Tax Customs Service Import DutyImport Duty Excise TaxExcise Tax Sales TaxSales 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 $6,00010% Others All Taxable income10%
Income Tax Rates - Comparison OLD Resident Natural Person 0 - $3,36810% $3,369 - $6,73715% $6,738 and above30% Others All taxable Income 30% Non-Resident Without P/E 20% NEW Resident Natural Person 0 - $6,000 0% $6,001 and above10% Others All taxable Income10% Non-Resident Without P/E 10%
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-resident 10%
Withholding Tax – final or further liability? Withholding tax withheld in respect of the following services is final, with no further liability, unless the 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 Imposed on taxable wages received by employee in respect of employment in Timor Leste Resident Natural Person Rate Monthly taxable wages $0 - $500 0% Monthly taxable wages in excess of $50010% Non-Resident Natural Person All taxable wages10%
DESIGNATED SERVICES Hotel Services Restaurant and Bar Services Telecommunications Services
IMPORT DUTY Most goods imported into Timor Leste are subject to import duty. 2.5% 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 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
EXCISE TAX (cont.) The list of excisable goods has been greatly reduced Beer 1.90 pl Wine, vermouth, fermented beverages 2.50 pl Other alcoholic beverages 8.90 pl Gasoline, diesel fuel products, etc 0.06 pl Tobacco and tobacco products 19.00 kg Cigarette lighters12% Smoking pipes12% Arms and ammunition200% Motor cars (on the value in excess of $70,000)35% Private boats and aircrafts20%
SALES TAX Sales tax is imposed on most goods imported 2.5% 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;