Sales tax is imposed on the sales tax value of:
- taxable goods imported into Timor-Leste and
- taxable goods sold or taxable services provided in Timor-Leste on or after the date specified by Parliament.
Taxpayers liable for sales tax include the following:
- A taxpayer who imports taxable goods into Timor-Leste.
- A taxpayer who sells taxable goods in Timor-Leste.
- A taxpayer who provides taxable services in Timor-Leste.
The rates of sales tax are 2.5% for taxable goods imported into Timor-Leste and 0% for the sale of taxable goods and provision of taxable services in Timor-Leste.
Services tax is imposed at 5% on any gross consideration of more than 500 United States dollars (USD) received by a taxpayer for the provision of hotel, restaurant and bar, or telecommunication services.
Import duty applies to imported goods (except for specifically exempted goods) at 2.5% of the 'customs value' of the goods. Customs value is the fair market value, including cost, insurance, and freight (CIF), as stated in the General Agreement on Tariffs and Trade (GATT) rules.
The following goods are exempted from import duty:
- Goods accompany a person arriving in Timor-Leste from another territory (limitations apply).
- Imports of the type exempted under specific international conventions.
- Goods re-imported in the same condition as when they were exported.
- Goods, other than alcohol or tobacco, imported by registered charitable organisations, registered under any law of Timor-Leste, provided the goods are to be used for charitable purposes of humanitarian assistance and relief, education, or health care.
- Other goods for temporary admission if the importer has provided security for the import duty in the prescribed manner.
- Goods for consumption by international staff of the United Nations Integrated Mission in East Timor or members of peace keeping forces from contingent countries, provided the goods are sold in conformity with prescribed rules of sale.
- Certain infant and female hygiene products.
- Other goods imported into Timor-Leste as personal goods accompanying a traveller and where the import duty that would be imposed on the import would be USD 10 or less.
Excise tax is imposed on excisable goods where removed from a warehouse by a registered manufacturer for consumption in Timor-Leste or imported into Timor-Leste.
Below is the list of excisable goods and the respective rates of excise tax:
|Excise tax rate
|Wine, vermouth, fermented beverages (such as cider)
|Ethyl alcohol (other than denatured) and other alcoholic beverages
|Gasoline, diesel fuel products, and other petroleum products
|Tobacco and tobacco products
|12% of the excise value
|12% of the excise value
|Arms and ammunition
|200% of the excise value
|Motor cars and small passenger vehicles (with an excise value exceeding USD 70,000)
|35% of the excise value
|Private boats and aircraft
|20% of the excise value
Note that the excise value of excisable goods imported into Timor-Leste is the total of the customs value and any import duty imposed. The excise value of excisable goods manufactured in Timor-Leste is their fair market value at the time of removal from the manufacturer's warehouse.
Goods on the above list are excisable goods, other than:
- goods imported into Timor-Leste that are exempt from import duty, or
- goods exported from Timor-Leste within 28 days after their production or import, as long as the taxpayer liable to excise tax submits to the Banking and Payments Authority documentary proof of the export of goods.
There are no taxes on property in Timor-Leste.
There are no transfer taxes in Timor-Leste.
There is no stamp duty in Timor-Leste.
An employer paying taxable wages shall withhold Wage Income Tax (WIT) at a rate of 10% from those wages and remit the WIT on a monthly basis.
An annual WIT return is due by the last day of the March following the end of the relevant tax year. Information on WIT withheld must also be provided to each employee on an annual basis or on termination of employment.
Social security contributions
A Social Security scheme was introduced in November 2016, with both employers and employees required to make contributions. The scheme provides cover for loss of income/benefits due to work-related accidents, maternity, old age, and death. It would appear that Social Security contributions should be deductible to employers. Implementing regulations for this scheme are still outstanding.