Timor-Leste residents are subject to income tax on worldwide taxable income, where taxable income is essentially the difference between gross income and allowable deductions. Non-residents are generally subject to income tax on Timor-Leste-source income attributed to a permanent establishment (PE) (see the Branch income section for more information). Non-residents without a PE may be subject to a 10% withholding tax (WHT) (see the Withholding taxes section for more information).
The income of companies is generally subject to corporate income tax (CIT) at a flat rate of 10%.
Industry-specific CIT rates
The rate of CIT for oil and gas contractors is 30%, while sub-contractors are subject to CIT at the flat rate of (generally) 6%.
Supplemental Petroleum Tax (SPT) also applies for oil and gas contractors and is imposed on 'accumulated net receipts' using a specific formula. SPT is deductible for CIT calculation purposes.
Separate tax arrangements apply for petroleum activities in the Joint Petroleum Development Area (JPDA) (see the Other issues section).
Local income taxes
There are no municipal or local taxes on income in Timor-Leste.