Kiribati

In Kiribati, employers face several key tax obligations, including contributions to the Kiribati National Provident Fund (KNPF) and withholding income tax.

Kiribati National Provident Fund (KNPF)

Employers are mandated to contribute 7.5% of each employee's gross salary to the KNPF. This is an employer-only contribution and should not be deducted from the employee's wages.

Pay-As-You-Earn (PAYE)

Employers must withhold income tax from employee salaries according to the PAYE system. The specific amount to be withheld is determined by the employee's income level, calculated using tax tables provided by the Kiribati Taxation Office. The PAYE tax is due within 15 days after the end of the month.

Provisional Taxes

Provisional tax is payable on a quarterly basis, in June, September, and December. The amount due per quarter is 27.5% of the latest year's tax due.

Business/Corporate Tax

Companies in Kiribati are subject to a standard corporate tax rate, but may be eligible for a reduced rate of 10% for the first five years of operation under "pioneer status," which is available upon application to the Internal Revenue Board. Standard corporate tax rate varies based on profit levels. For profits up to $25,000, the rate is 20%. For profits between $25,001 and $50,000, the rate is 30%. Profits exceeding $50,000 are taxed at 35%. Non-resident companies are taxed at a flat rate of 30%.

Value Added Tax (VAT)

Kiribati has a standard VAT rate of 12.5%.

Record Keeping

Employers are required to maintain payroll and tax records for seven years following the relevant tax year.

It is important to remember that this information is current as of February 5, 2025, and may be subject to change. Consulting with a tax professional or referring to official government resources is recommended for the most up-to-date details.

In Kiribati, employee tax deductions primarily revolve around mandatory contributions to the Kiribati Provident Fund (KPF) and income tax, with authorized deductions not exceeding one-third of an employee's wages per pay period.

Kiribati Provident Fund (KPF)

Both employers and employees contribute to the KPF, a social security scheme. The employee contribution rate is 7.5% of their salary. Employers also contribute 7.5% of the employee's salary to the fund. These contributions are deducted directly from the employee's wages.

Income Tax (PAYE)

Employees are subject to Pay As You Earn (PAYE) income tax. The rates are progressive, meaning higher earners pay a larger percentage. As of 2025, the rates for residents are:

• 20% on income up to AUD 25,000
• 30% on income between AUD 25,001 and AUD 50,000
• 35% on income above AUD 50,000

Non-residents are taxed at a flat rate of 30% regardless of income level. It is crucial to note that tax regulations can change. Therefore, it's always recommended to consult with a tax advisor or the relevant authorities for the most up-to-date information.

Other Deductions

Other deductions can be made from an employee's salary, provided they are authorized by law and the employee consents. These deductions, combined with KPF contributions and taxes, cannot exceed one-third of the employee's wages for a given pay period. Some examples might include:

• Union dues (if applicable)
• Court-ordered deductions (e.g., child support)
• Loan repayments (with employee consent)

Employer Responsibilities

Employers are legally obligated to deduct the correct amounts for KPF, PAYE, and other authorized deductions. They must also maintain accurate records of all deductions and remit them to the appropriate authorities. Failure to comply with these obligations can result in penalties.

Employee Rights

Employees have the right to receive a payslip detailing all deductions made from their salary. They also have the right to question any discrepancies or unauthorized deductions.

Tax Year and Deadlines

The tax year in Kiribati typically aligns with the calendar year. Deadlines for filing tax returns and remitting payments vary, and it's essential for both employers and employees to adhere to these deadlines to avoid penalties. Specific deadline information can be obtained from the Kiribati Revenue Authority.

Additional Information

For more detailed and up-to-date information, employers and employees can refer to the Kiribati Inland Revenue website or consult with a tax professional. It is essential to stay informed about any changes to tax laws or regulations that may impact deductions.

In Kiribati, the Value Added Tax (VAT) is a consumption tax levied on most goods and services at a standard rate of 12.5%.

VAT Rates and Thresholds

The standard VAT rate in Kiribati is 12.5%, applied to most goods and services. Businesses with an annual turnover exceeding AUD 100,000 are required to register for VAT. Voluntary registration is available for businesses below this threshold. Non-resident providers of electronic services to local consumers are also subject to VAT and must register if their turnover exceeds AUD 100,000, appointing a local VAT representative.

VAT Filing and Payment

Businesses must file VAT returns either monthly or quarterly, depending on their size. Payments are due by the 20th day of the month following the reporting period. Late payments may incur penalties and interest. Businesses with excess input VAT over output VAT may be eligible for a refund. As of today, February 5, 2025, this information is current, but regulations can change.

Exemptions and Zero-Rated Supplies

Certain goods and services are exempt, meaning no VAT is charged, and input VAT is not recoverable. Common exemptions include basic foodstuffs, education, health services, and some financial services. Some supplies, like exports, are zero-rated, meaning a 0% VAT rate applies, and input VAT is refundable. This distinction is important for businesses to manage their VAT obligations effectively.

Administrative Requirements

Registered businesses are required to issue tax invoices with specific details, including the VAT registration number, VAT amount, and total transaction value. Maintaining records for at least six years is crucial for compliance. Penalties apply for non-compliance with VAT regulations, ranging from fines and interest to legal action. The information provided is for general guidance only and is considered accurate as of today, February 5, 2025. However, regulations may change, and consulting with a tax professional for specific advice is always recommended.

Kiribati's tax system focuses on consumption-based taxes like VAT, with ongoing reforms to modernize income tax laws.

Value Added Tax (VAT)

• Rate: 12.5% on most goods and services, including imports.
• Registration Threshold: Businesses with annual turnover exceeding AUD 100,000 must register. Voluntary registration is available for businesses below this threshold.
• Exemptions: Basic foodstuffs, education, health, and certain financial services.
• Zero-Rated Supplies: Exports.
• Input Tax Credit: Registered businesses can offset VAT paid on purchases against VAT collected on sales.

Income Tax

• Ongoing Reform: A new Income Tax Bill is under consideration, aiming to simplify administration, clarify exemptions, and expand the tax base (including seabed mining).
• Foreign Tax Credit: Available for resident companies with overseas income, equal to the lower of Kiribati income tax or foreign tax paid. Calculated as the percentage of Kiribati income tax (before credit) against chargeable income.

Tax Incentives

• A 100% depreciation allowance for new seabed mining exploration activities is proposed in the draft income tax bill to stimulate investment in this sector.
• Further details on other specific tax incentives are not available within the current scope of information. It's advisable to consult Kiribati's Ministry of Finance and Economic Development (MFED) for the most current details on tax incentives and regulations.
• Historically, investment incentives have included pioneer status, import duty concessions, and tax relief, though specifics require further confirmation from official sources.