Corporate Income Tax (CIT)
TAXATION SYSTEM
The Corporate Income Tax (CIT) is a cornerstone of Timor-Leste's tax regime for businesses. The general rate is remarkably low, making it an appealing jurisdiction for corporate entities.
The Corporate Income Tax (CIT) is a cornerstone of Timor-Leste's tax regime for businesses. The general rate is remarkably low, making it an appealing jurisdiction for corporate entities:
General Rate: The income of companies is generally subject to a flat Corporate Income Tax (CIT) rate of 10%. This low rate is a significant incentive for businesses looking to establish a presence in the region.
Industry-Specific Rates: Certain sectors may have different CIT rates:
Oil and Gas Contractors: Subject to a CIT rate of 30%.
Oil and Gas Sub-contractors: Generally subject to a CIT rate of 6%.
Supplemental Petroleum Tax (SPT): In addition to CIT, oil and gas contractors are also subject to a Supplemental Petroleum Tax (SPT). This tax is imposed on 'accumulated net receipts' and is calculated using a specific formula. Importantly, SPT is deductible for CIT calculation purposes, mitigating its overall impact.
Capital Gains: Gains derived from the alienation of assets (e.g., sale of property, shares) are subject to the standard 10% corporate income tax rate. There is generally no distinction made between revenue gains or capital gains for CIT purposes.