Timor-Leste

Taxable period

The standard tax year is the calendar year, although different accounting year-ends can be granted upon application.

Tax returns

CIT returns are to be filed annually by the last day of the third month following the year end.

Service tax, excise tax, sales tax, and WHT are to be filed monthly by the 15th day of the following month.

Payment of tax

CIT due shall be settled to the Banking and Payments Authority or another entity nominated by the Timor-Leste Revenue Service by the date of filing (see above).

Service tax, excise tax, sales tax, and WHT should be settled to the Banking and Payments Authority or another entity nominated by the Timor-Leste Revenue Service by the 15th day after the end of the following month.

Penalties

If a taxpayer fails to deliver the tax form on time, it shall be liable to an additional tax of USD 100. If a taxpayer fails to deliver all or part of any tax due by the due date, that taxpayer shall be liable to an additional tax of 5% of the amount due plus an additional 1% of the tax due on the 15th day of each month following the due date and:

• if the failure was due to gross carelessness on the part of the person, further additional tax of 25% of the tax that remains unpaid, or
• if the failure was due to a deliberate attempt to avoid payment of tax, further additional tax of 100% of the tax that remains unpaid.

If a taxpayer has understated the tax due in the tax form, that taxpayer shall be liable to an additional tax of 15% and:

• if the understatement was due to gross carelessness on the part of the taxpayer, further additional tax of 25% of the tax understated, or
• if the understatement was due to a deliberate attempt to avoid payment of tax, further additional tax of 100% of the tax understated.

Tax audit process

Assessments may occur upon the following:

• The delivery of a tax return form and payment.
• After receipt of a return where the Commissioner believes a return is incorrect.
• Where a taxpayer fails to file a return.

Assessments may be amended according to the following events:

• By the taxpayer upon delivery to the Commissioner of an amended assessment.
• Via a taxpayer request to the Commissioner.
• Via specific amendment by the Commissioner.

Statute of limitations

The Timor-Leste Revenue Service may issue an assessment notice or amend an assessment notice only within five years from the date of filing of the return. In the event of a deliberate tax evasion or fraud, there is no time limit for the issuance of an assessment notice.

Topics of focus for tax authorities

Based on our experience, the Timor-Leste tax authorities are focussing on the timely remittance of the tax obligations. From an industry perspective, the oil and gas sector continues to be a focus. Finally, there have been numerous challenges of tax concessions granted on a contractual basis, including by government agencies.