Corporate - Withholding taxes

Last reviewed - 19 March 2024

WHT is imposed on the following payments by residents to a resident:

Type of payment WHT rate (%) Final/non-final tax
Dividends 0 Final
Interest 0 Not final
Royalties 10 Not final, except where paid to an individual
Rent (land and building) 10 Not final, except where paid to an individual
Prize and winnings 10 Final
Construction/building activities 2 Final *
Construction consulting services 4 Final *
Air and sea transportation 2.64 Final *
Mining and mining support services 4.5 Final *

* The default position is that such amounts will be a final tax. The income recipient can elect to have these payments for services not subjected to final tax by submitting a notification letter to the Timor-Leste Revenue Service.

Payments of Timor-Leste-source income made by a resident to a non-resident are subject to WHT at 10%. Timor-Leste has entered into a double taxation treaty (DTT) with Portugal (although elements of DTT relief are also embedded in the Timor Sea Treaty [TST], see Taxation of petroleum operations in the Other issues section).

Where WHT is applied as a final tax, the taxed income is not included in the recipients’ taxable income for income tax purposes. Accordingly, expenses incurred in deriving income that is subject to final tax are not deductible for income tax purposes.