In Timor-Leste, employers have several tax responsibilities. One of these is the Wage Income Tax (WIT). Employers are required to withhold WIT from employee salaries and remit it to the Timor-Leste Revenue Service (TLRS). The rates for residents are progressive, while non-residents are taxed at a flat rate of 10%. The payment deadline for this tax is by the 15th of the month following the month of withholding.

Social Security Contributions

Another responsibility for employers is contributing to the social security fund on behalf of their employees. The employer contribution rate is 6% of the employee's gross salary. The payment deadline for these contributions is by the 10th of the month following the month of contribution.

Other Potential Taxes

There are also other potential taxes that may apply to employers. These include the Goods and Services Tax (GST), which may apply to the sale of goods and services unless specifically exempted. There's also the Excise Tax, which is levied on certain products like alcohol and tobacco. Lastly, Property Tax may also be applicable.

In Timor-Leste, all employees earning income are subject to Wage Income Tax (WIT). This is an income tax on employment income. The rates for this tax vary depending on whether the employee is a resident or non-resident. Residents are taxed under a progressive tax system with varying rates based on income level. Non-residents, on the other hand, are taxed at a flat rate of 10%. The tax is calculated on the employee's gross income after applicable deductions and allowances.

Social Security Contributions

Another mandatory tax for employees in Timor-Leste is the Social Security Contributions. All employees are obligated to contribute to the social security fund, with potential exceptions based on employment type. The rate for this contribution is 4% of the employee's gross salary. The calculation of this tax is based on a percentage of the employee's gross salary.

In Timor-Leste, a comprehensive Value Added Tax (VAT) system is not currently in place. Instead, the country uses a Goods and Services Tax (GST) system, with a standard rate of 10%.

Zero-Rated Supplies

While a true VAT system is not in place, some supplies may be zero-rated under the GST system. For the current list, it's recommended to consult the Timor-Leste Revenue Service (TLRS).

GST Exemptions

Certain types of services may be exempt from GST in Timor-Leste. These could include financial services, medical and healthcare services, and educational services. A limited range of other services might also be exempt. For an updated list and specific exemptions, it's essential to consult the TLRS.

GST/VAT Registration and Filing

While a comprehensive VAT is not in place, a registration threshold for GST might exist. For the latest requirements, consult the TLRS. The filing frequencies for GST returns, if applicable, will be outlined by the TLRS. Similarly, payment deadlines for GST will be established by the TLRS.

In Timor-Leste, a variety of tax incentives are available to stimulate economic activity and attract foreign investment. These incentives are designed to encourage investment in priority sectors, create jobs, and facilitate technology transfer.

Corporate Income Tax (CIT) Exemption

This incentive involves a complete or partial exemption from corporate income tax for a specified period. To qualify, investment projects must be in priority sectors designated by the government, such as infrastructure development, tourism, manufacturing for export, agriculture, and fisheries. Other qualification criteria include minimum investment thresholds, which vary depending on the sector and project location, and a contribution to job creation and technology transfer. The application process involves submitting an application outlining the investment project and demonstrating adherence to eligibility requirements to the relevant authorities.

Special Economic Zones (SEZs)

Special Economic Zones are designated areas offering significant tax and customs duty benefits to attract both foreign and domestic investment. The nature of the business activity (manufacturing, trading, services) and minimum investment thresholds may apply as qualification criteria. Specific zones may target certain industries. For details on application procedures and required documentation, contact the relevant SEZ authority.

Import Duty Exemptions and Reductions

This incentive involves reduced or eliminated import duties on machinery, raw materials, and other essential items used in production. It typically applies to businesses operating within approved investment projects or SEZs. Imported items must be for the approved activity and not commercially available domestically. The application process may be part of the overall investment project application process or handled through customs authorities.

Other Potential Incentives

Other potential incentives include tax deductions and allowances, such as accelerated depreciation deductions for investments in machinery and infrastructure, depending on the specific project and sector. For oil and gas exploration and production, a separate tax regime with profit-sharing structures is in place.