Key Tax Laws and Regulations
TAXATION SYSTEM
Timor-Leste has established a tax system designed to be competitive and attractive to foreign investment, characterised by one of the lowest corporate income tax rates globally.
Timor-Leste has established a tax system designed to be competitive and attractive to foreign investment, characterised by one of the lowest corporate income tax rates globally. Understanding the various taxes and their implications is crucial for businesses operating or planning to operate in the country.
The primary legislation governing the tax system in Timor-Leste is the Taxes and Duties Act 2008. This act consolidates various tax regimes and provides the legal framework for the assessment and collection of taxes. Other specific laws and regulations may also impact the tax system, particularly for specialised sectors like petroleum operations, which often have their own distinct tax arrangements.
Notably, Timor-Leste does not implement a Value Added Tax (VAT) or a similar broad-based consumption tax. Instead, it utilises the sales tax system as described above. This can simplify tax compliance for some businesses compared to jurisdictions with complex VAT systems.